Investment Trusts - February 2012

Published by Financial Adviser | Feb 09, 2012

With the advent of the retail distribution review, and the arrival of adviser charging, the sector hopes it will be on a par with the rest of the fund management universe when it comes to adviser remuneration.

The sector is also trying to make the most of selling its advantages - an investment trust has a finite number of shares, which makes it much easier when investors want to sell up. This means no widespread unwinding of the top assets in the fund in the case of a downturn in investor sentiment. In addition, it means that investment trusts can gear up in readiness of an upturn.

However, its share structure comes with complications. It means that the share price can lead to a value of the company that is either at a premium or at a discount to the net asset value of the investments. Discounts are near the double-digit territory, but companies have been introducing discount controls, which have had an effect.

But the big question mark is the RDR, and what happens next year. Advisers wanting to remain independent have to advise across the whole universe of products, and this will include resorting to investment trusts much more frequently. Many are hoping that this will give the sector a boost, and move the products higher up the list of investors’ portfolios.

This special report is brought to you in association with JPMorgan. For further fund information please click here.