Trusts show mettle in less liquid assets

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Investment Trusts - June 2015

But he warns currencies have made a “significant impact” on UK investors. “A year ago the US dollar stood at $1.73 to the pound; today it is $1.55. If you hedged the position you would be significantly less well off – the S&P 500 index is up 13.6 per cent in local terms, but up 23.4 per cent for sterling-based investors,” he says.

Investors should try not to be swayed by short-term investment trust performance, but instead should take a longer-term view. Investment trusts’ ability to gear, for example, mean they generally perform better over longer periods.

One trust’s performance will be under particular scrutiny following a high-profile launch: Neil Woodford’s Patient Capital trust. So great was demand that Mr Woodford raised the £500m upper limit for fundraising to £800m in April, making it the largest ever investment trust launch in the UK. Woodford Patient Capital Trust will invest in quoted and unquoted UK companies.

Ian Sayers, AIC chief executive, says: “It’s a testament to the investment company sector that this distinctive company is taking advantage of the benefits of the closed-ended structure, such as the ability to invest in specialist, small, less liquid assets.”

Ellie Duncan is deputy features editor at Investment Adviser