Investment Trusts  

How can advisers access investment trusts?

This article is part of
Guide to Investment Trusts

How can advisers access investment trusts?

Investment trusts have been around for a long time – some of them have even outlived several members of the monarchy.

As the Association of Investment Companies (AIC) points out three investment trusts are celebrating 130 years respectively since their launch.

JPMorgan Global Growth and Income, Scottish Investment Trust and Henderson Smaller Companies were all launched in 1887.

Despite this it has taken years for closed-ended funds to be offered by many of the biggest platforms as open-ended funds remained the more popular investment vehicle among advisers and investors.

Meeting demand

FundsNetwork, Fidelity International’s platform, only began offering access to investment trusts in 2015, with 54 of the most popular available via the platform.

Then in July 2016 it announced it was launching an additional 25 trusts on the platform, citing advisory firm demand, meaning it now offers firms and their clients access to 91 investment trusts.

At the time of the announcement, Danny Wynn, head of fund partners at Fidelity International, commented: “We have continued to see a steady uptick in demand for investment trusts since we introduced these vehicles on FundsNetwork.”

Is it a case of a lack of demand from investors which means platforms cannot justify offering investment trusts, or if more platforms provided closed-ended funds would there have been more interest from investors?

Just why has it taken so long for some of the major platforms to be able to offer clients investment trusts?

James Burns, co-head of Smith & Williamson’s Managed Portfolio Service, explains: “I think people are more aware now of what’s available, or more aware than they have been in the past. I think post-RDR IFAs feel there’s more pressure on them to consider them, and therefore they are looking at [investment trusts] more.”

The advent of RDR was a turning point, it seems, for the investment trust sector as it forced advisers to look at the range of investment vehicles they could offer their clients.

Those advisers not familiar with the structure of investment trusts and how they sit in a portfolio soon had to brush up on their knowledge.

At the same time, the AIC has been making efforts to help the adviser community familiarise themselves with closed-ended funds by running regular training sessions.

Improving access

Mr Burns notes there have also been more recent investment trust launches, with high profile manager names such as Neil Woodford bringing an investment trust to market.

He says: “Whereas historically they’ve been targeting just the private wealth-type firms like us, they’re also doing open offers to retail as well through Hargreaves Lansdown.”

He believes this means investment trusts have become more accessible to advisers and investors.

Annabel Brodie-Smith, communications director at the AIC is encouraged by the increasing number of platforms offering investment companies.