Impact of the Retail Distribution Review

If not, then they have to declare themselves as ‘restricted’.

James Budden, director at Baillie Gifford, says RDR raised awareness of investment trusts in the marketplace.

But Mr Budden says the fact that investment trusts mostly outperform Oeics across sectors is only now starting to be slowly recognised by IFAs.

He says: “They (IFAs) cannot really ignore a group of funds which perform better if they are looking whole of market on behalf of their clients.”

Post the Retail Distribution Review, Tim Mitchell, head of investment trust sales at JP Morgan Asset Management, says it is really encouraging to see more advisers fully embracing the benefits investment companies have to offer investors.

He says there has been increased recognition that lower on-going charges, high levels of corporate governance and structural advantages all combine to deliver a compelling investment experience for shareholders of closed-ended funds.

In terms of take-up of investment trusts, sales have surged post-RDR – especially via platforms.

Back in March, data published today by the Association of Investment Companies (AIC), using Matrix Financial Clarity, demonstrated that investment company total purchases on platforms by advisers and wealth managers were £452.7m in 2014, 19 per cent more than £379.1m in 2013 and 106 per cent more than £219.3m in 2012.

In the fourth quarter of 2014, platform purchases of investment companies were at £110.3m, 10 per cent more than purchases of £100.3m in the fourth quarter of 2013 and 90 per cent more than purchases of £58.1m in the fourth quarter of 2012.

Investment company purchases at £110.3m in the fourth quarter of 2014 were stable when compared to £110.6m in the third quarter of 2014.

While 2014 was a strong year for purchases there was also a significant increase in sales, which rose 40 per cent to £290.9m compared to £208.4m in 2013.

The AIC says these figures suggest some advisers and wealth managers are taking profits and rebalancing portfolios.

At the time of the release of the figures, Ian Sayers, chief executive of the AIC, said: “It is very encouraging that adviser purchases of investment companies on platforms have continued to rise in 2014 and have more than doubled since pre-RDR levels.

“Though sales have increased, we should remember that this trading activity all helps to improve liquidity.”

If sales of investment trusts are to truly take-off it is access via platforms, which are now the near universal choice for advisers and their clients, that providers must focus on, according to Robin Stoakley, managing director for UK intermediary at Schroders.

It is with platforms that the investment trust industry must look if we are to see a quantum shift in demand from the adviser market, Mr Stoakley says.

He says: “There is the inevitable question of the chicken and the egg: advisers say that there are not enough platforms offering investment trusts but the platforms say that there is insufficient demand.

“If we are to see the potential of the Retail Distribution Review really deliver, it is this area that needs to change materially from where we are today, nearly three years since the introduction of the RDR.”