InvestmentsMar 12 2012

Plain sailing after the RDR?

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ByNyree Stewart

From January 1 2013 if advisers want to remain independent they will have to prove they have considered all investment options, including investment trusts, under the RDR.

Investment trusts are still seen by some as an almost niche area, particularly as many investment platforms do not have the ability to offer listed securities. The question is that if this changes after RDR implementation, will it make a difference in terms of popularity and usage of investment trusts?

Holly Mackay, managing director of The Platforum, points out that while there is approximately £175bn on UK platforms today, the vast majority of assets are in mutual funds.

She explains: “We think there are two key factors at play here. First, the fact that Skandia, Cofunds and Fidelity FundsNetwork do not offer listed securities today and they have approximately a 55 per cent adviser platform market share.

“Cofunds and Fidelity have both stated intentions to add listed securities to their platforms and Cofunds recently announced a deal with Barclays. So the world is changing.

“However, availability on the supermarket shelves does not mean people will necessarily buy. Many advisers we have interviewed are still a little uncomfortable with investment trusts. So while we think that investment trusts will make it to the aisles, we’re not convinced that they will start to fly off the shelves come January 2013.”

Michelle Woodburn, manager for fund group relations at Cofunds, explains the company recently appointed Barclays Stockbrokers to provide clients with the Cofunds Stock Trading Service, which has been piloted with an initial 10 accounts offering clients access to listed securities such as investment trusts and exchange traded funds.

“That is already up and running because we have had demand from a number of our clients to be able to access these investments via the Cofunds platform. We recognise that listed securities are important to an independent financial planner and we will look to roll out this pilot further,” she says.

“We still have on our radar more of a Cofunds solution to direct equities and ETFs and investment trusts, but to get it integrated onto the platform would [only happen] roughly mid 2013 at the earliest. Of course, there is this solution in place for those advisers that want it sooner than that.”

Fidelity FundsNetwork also notes the growing demand for investment trusts has encouraged them to expand the remit of the platform.