InvestmentsMar 12 2012

Opened up to a wider audience

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With the 2011 tax year nearing a close, many investors will be flocking to put their investments in order and searching for the most tax efficient package available to them.

In the past several years, there has been a steady growth in the popularity of investment trust savings schemes, stock and shares accounts equivalent to the traditional Isa.

The savings schemes give investors access to investment trust shares without the expense and trouble of going through a stockbroker. They are cheap and simple to use, their required minimum investments are low and they admit a flexible range of lump sums or regular savings plans. Since their launch in the 1980s, they have opened up investing in the stockmarket to a wider audience.

Sherry-Ann Sweeting, marketing manager at Scottish investment trust, says: “It’s very easy. It’s cost effective. You can invest a lump sum, or you can invest regularly. It enables you to have access to the performance of the tens or hundreds of companies that the investment trust that you’ve chosen invests in.”

Not only this, but an investment trust savings scheme gives inexperienced, time-starved investors access to a fund manager’s stockpicking expertise.

“Very often investors who use an online share dealing centre maybe play the market and have the time, energy and expertise to be picking stocks for themselves and managing their own portfolio on a regular basis,” Ms Sweeting explains.

“[However,] you still have this enormous range of stocks and it is therefore very difficult for the individual investor to access unless that is their hobby, [and] that’s all you do with your life. I would hazard that once you are over 100 [companies] you’re looking at an investment range where it would be very unusual for the individual to be able to manage. That is what you get through investing in an investment trust savings scheme.

“With an investment trust savings scheme you’re accessing the stockpicking expertise of the managers of the investment trust. For example, the shares that investment trusts invest in range from 50 or 60 [holdings] up to Foreign Colonial, which I think invests in up to 600 shares, so you’re accessing all those shares and the expertise of the fund managers picking those shares in a very cost effective way,” she adds.

As there is no maximum limit to the number of schemes an investor can hold, investing in such vehicles also allows an investor to diversify their portfolio.

Ms Sweeting says that global growth investment trusts can be the cornerstone of an investor’s portfolio, as they add breadth and spread the risk.