Investment trusts have never attracted the same level of interest as their open-ended counterparts. Despite favourable charges and returns in many cases, they have always lived in the shadow of Oeics.
But with the RDR firmly in place, investment trusts must be considered alongside open-ended funds. Find out how to invest in investment trusts via a platform with MM’s top tips.
1. Assess which platforms offer investment trusts. Not all do, and the big three – Cofunds, Fidelity and Skandia – do not offer them. Many argue that investment trusts should be offered on all platforms but platforms are not obliged to provide access. To be fully independent and RDR-compliant, advisers should consider using another platform or an off-platform approach if an investment trust is most appropriate for your client.
2. Figure out how investment trusts are listed on platforms. Some may label them as investment trusts in their own right, but others will list them under ‘shares’, ‘equities’ or ‘UK funds’.
3. Accept that they may not be as prevalent on platforms as open-ended funds. Sometimes you have to do a bit of digging to find investment trusts on platforms and the information available on them may be in a different place or format. This should change if interest in investment trust grows, but for now they should not be ignored just because they have less prominence.
4. Don’t forget that you can use a combination of fund types. There is no reason to stick to just open or closed-ended funds just because you are using a platform; the two can be as easily combined as using an Oeic and having a shareholding in a particular company.
5. Remember that liquidity can be an issue for large deals. For the typical investor, deals in investment trusts are unlikely to hit a liquidity problem. But if you want to buy or sell a large volume in one day – switching all of your clients in a particular model portfolio from one fund to another, for example – it may be necessary to deal in stages for investment trusts.
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