More investment trusts are likely to follow British Assets’ lead and adjust their mandate to target the new pensions market, according to trust experts at Winterflood.
Last month the board of the British Assets trust picked BlackRock as its new manager, replacing F&C, and is set to adjust its strategy to become a multi-asset income trust.
The board said it was explicitly targeting pensioners following George Osborne’s reforms to retirement savings.
Winterflood has declared the moment an “inflection point” for the investment trust sector and predicted other trusts are likely to follow in the wake of British Assets.
The Winterflood analysts, Simon Elliott, Kieran Drake and Innes Urquhart, said: “These proposals mark an important inflection point in the evolution of investment trusts and the sector’s attempts to meet changing investment needs.
“We suspect many across the industry will monitor British Assets’ progress carefully and it seems likely that others may consider following its lead.”
The analysts said the ability of investment trusts to maintain “revenue reserves”, due to being a fixed pool of capital, would allow trusts greater support for a high and growing dividend than equivalent open-ended funds, making it an ideal choice for retirees.
They said: “In theory this should hold huge appeal to retirees seeking to invest their pension pots in funds that provide attractive and reliable levels of yield.
“British Assets’ yield of nearly 5 per cent paid through quarterly dividends would certainly meet this requirement.”
