Do trusts finally have the right platform?

Behemoth provider Fidelity FundsNetwork is the latest platform to extend the range of access to the vehicles, while Old Mutual has suggested it expects to make the move next year.

This delay is despite the introduction of the RDR – heralded by many as a level playing field for trusts alongside open-ended vehicles.

However, some are adamant they have not seen an uptick in demand from advisers for investment trusts, with both Nucleus and Zurich voicing this opinion.

It’s frustrating when direct-to-consumer (D2C) platforms offer access to new trust launches, while not many adviser platforms facilitate this Neil Mumford, Milestone Wealth Management

Zurich head of retail platform strategy Alistair Wilson explains: “We haven’t witnessed any spikes in requests or usage of investment trusts recently. Investment trusts have yet to make the breakthrough with advisers.”

Meanwhile Cofunds doesn’t currently offer access to investment trusts at all, stating that “demand for these types of propositions remains low”.

But Milestone Wealth Management chartered financial planner Neil Mumford believes that “if you are an investment platform, you should be offering access to all assets. Otherwise you’re not an investment platform, you’re a fund supermarket.” His firm buys investment trusts for client portfolios through Axa Elevate and more recently Alliance Trust Savings.

Mr Mumford explains: “There’s very few platforms which allow the reinvestment of dividends. Alliance Trust allow this and are cheap, offering a fixed fee, rather than a percentage of assets.”

He adds: “It’s frustrating when direct-to-consumer (D2C) platforms offer access to new trust launches, while not many adviser platforms facilitate this. I’m gobsmacked that platforms haven’t got their act together on this, particularly as subscription shares are offered at launch that clients will miss out on.”

The adviser explains this makes the administration process “cumbersome” if shares are bought elsewhere, and then transferred to a tax wrapper.

But Stephen Peters, investment analyst at Charles Stanley, disagrees that all platforms should offer access to all investment trusts.

“I don’t think all trusts should be available on platforms, but perhaps the biggest 50 or so should be – which would satisfy most demand,” he argues.

“There are big hurdles here and now to overcome, before even coming to new issues. These are over trust pricing, dealing terms, voting of shares held on platforms and the cost and ability to use trusts within model portfolios managed on third-party platforms.”

Addidi Wealth founder Anna Sofat says she doesn’t see why platforms wouldn’t offer access to new investment trust launches unless there were a specific commercial reason. Her firm typically buys investment trusts through 7IM and Nucleus.

She explains: “With more open-architecture platforms, you can choose which investment trust you want to buy, rather than seeing what’s available and basing your recommendation on that.”

Phillippa Gee Wealth Management managing director Phillippa Gee also buys investment trusts through Nucleus. But Ms Gee suggests platforms need to have much lower minimums for investment trust dealing.

“An investor paying a regular lump sum, say monthly, will have to wait before they can invest,” she says.

“As the purchase of an investment trust usually goes through a stockbroker, there is normally a minimum level of investment, say £500. If investment trusts want better sales, they need to start communicating with financial advisers.”

There are big hurdles to overcome, before even coming to new issues Stephen Peters, Charles Stanley

The firm primarily buys investment trusts directly through its own nominee platform, as this gives access to the full range of investment companies. Mr Haynes says platforms should offer a wider range of trusts, as “it is still not easy to access more niche offerings”.

Meanwhile Adrian Shandley, managing director at Premier Wealth Management, agrees that platforms offering investment trusts at launch would be useful, but says asset managers have further to go in this respect.

“Investment trust groups are not very good at communicating their launches. Unit trusts have a big marketing spend and use this well. This is one of the reasons why investors don’t understand trusts as much – because they’re not pushed to them,” he explains.

Joanne Ellul is a freelance journalist