Advisers and platforms need to consider the client and offer access to investment trusts, the director general of the Association of Investment Companies has warned.
Ian Sayers said: “Generally we hear that many platforms do not offer investment trusts, but really the majority of them do offer them.
“Most advisers have access to two, three or even four platforms, and if the adviser has at least one platform that offers investment companies, then it is not worth saying that they cannot use them or buy them.”
However, Mr Sayers did acknowledge that many advisers were considering whether to remain independent or go restricted.
He said: “If the IFA decides to go restricted, that is his decision commercially. But we have seen that more advisers are recommending investment trusts post-RDR. I think the growth in adviser recommendations has come about because of more education and more familiarity.”
Mr Sayers said there was a strong performance rationale that advisers could consider. He pointed to performance figures from Canaccord Genuity, which found that £100 invested in the Global investment company sector would have turned into £272 over 10 years.
The same investment in the IMA Global sector would have turned into £208. Mr Sayers added: “Put another way, investment companies have outperformed by about 3 per cent a year for 10 years. And many other sectors show similar, or even greater, levels of outperformance.”
This comes as platform provider Zurich added a range of investment trusts to its ‘Zurich Collection’ fund list, powered by Square Mile Consulting. Zurich has more than 160 investment trusts already available on the platform.
Mark Peters, head of retail wealth propositions for Zurich UK Life said: “The addition of investment trusts within the Zurich Collection range adds a further option for advisers who want to drive the right outcomes for their customers.”
Nick McBreen, adviser for Cornwall-based Worldwide Financial Planning, said: “There are several strands to this. The independent/restricted issue is smoke and mirrors and this problem will run and run. But independent, whole-of-market, fee-based advisers should be advising on investment trusts and they can be important as part of a good diversified approach but there are housekeeping issues.
“An investment trust is effectively a direct equity, therefore the remit and brief of that advisory firm should cover this in terms of risk management. Investment trusts are often viewed by compliance and PI insurers as being a direct equity so going down this track with a certain client can be seen as very different to using mainstream collective investment funds.”
