There are more calls for platforms to expand their offerings, with new data revealing that 57 per cent of financial advisers are not recommending investment trusts to their clients, due to a lack of platform access.
Association of Investment Companies data earlier this month showed investment trust purchases on platforms by advisers and wealth managers actually reached a new record high of £125.3m in the first quarter this year, 14 per cent more than purchases of £109.7m in the first three months of 2014.
James de Sausmarez, director and head of investment trusts at Henderson, said: “It is alarming that IFAs do not recommend investment trusts to their clients simply because they do not understand them or do not have access to them via the large fund supermarkets.”
He called on the major fund platforms, Fidelity FundsNetwork, Cofunds and Old Mutual, to accelerate their plans to provide access to investment companies.
A Henderson survey, conducted by YouGov among 208 IFAs, found that 76 per cent of IFAs admitted they thought investment trusts were important investment vehicles for their clients because of their growth and income potential.
However, the survey also revealed that lack of platform access was not the only problem, with 12 per cent stating they do not recommend trusts because they do not understand the products themselves, while 11 per cent stated that they are too difficult to access via fund supermarkets.
Additionally, 12 per cent said they do not offer investment trusts simply because they only offer-open product advice.
But while adviser takeup is clearly increasing, it appears to be from a relatively low base and many are still sceptical of the benefits over traditional unit trusts.
Henderson’s survey showed that the market view of investment trusts in portfolios is still polarised, with only 18 per cent of IFAs reckoning the popularity of investment trusts will increase in the future because the largest platforms make it difficult for advisers to offer a full range of investment trusts.
Gregor Johnston, chartered financial planner at Fitzallan Limited, conceded the Retail Distribution Review (RDR) means trusts are no longer “necessarily the cheapest kids on the actively-managed block”, but an attractive discount and low management charges can mean long-term value.
“Some trusts don’t use gearing, but where managers can demonstrably enhance the trust’s returns using borrowing, it can add to the attraction.”
He added that high gearing and widening discounts will work against investors from time to time, but for those offering independent advice to long-term investors, “the extra choices and additional value available in the investment trust sector can’t be ignored”.
This follows online platform Novia calling out other platforms that do not offer exchange traded funds.
Earlier this week, Novia chief executive Bill Vasilieff said some of the larger fund supermarkets were trying to “muddy the waters” around ETFs by branding them “risky” and stating there was a lack of demand from advisers and clients.
peter.walker@ft.com
