Barclays Wealth's Aylward on why he won’t buy investment trusts

This recent underperformance doesn’t concern Aylward however, who said: “We would always want to have a balance of growth funds and value funds, knowing that each can enjoy a period of strong performance. The aim is to have the best of each. We are very comfortable with Nick’s positioning and long term style.” 

Ben Yearsley, investment director at Fairview Consulting, said: “I’m a big fan of investment trusts, but you have to be aware of the downsides, and liquidity is a downside.

"But for a smaller adviser, who has a client with £250,000 and is looking to invest in 20 different funds, liquidity is not an issue, and investment trusts work.

"They can get exposure to some very good trusts. I am a big fan of Nick Train and investors should not worry about recent performance. In fact it may mean now is a good time to get into a product run by him.”  

Nick Britton, head of intermediary communications at the Association of Investment Companies, a trade body for investment trusts, said: 

“It is true that large model portfolio ranges can struggle to use investment companies due to their liquidity needs and desire to avoid becoming significant shareholders. However, it’s a matter of perspective whether you see that as a shortcoming of investment companies, or a downside of large model portfolios, which might be missing out on opportunities for diversification, exposure to less liquid asset classes, or simply a wider choice of investments.”

While unwilling to invest in closed-ended funds, Aylward is comfortable with investing in smaller funds, and with seeding new funds, though said he was wary of owning too much of any fund for liquidity reasons. 

A feature of the Barclays Wealth and Investment fund selection process is the presence of an “operational due diligence team”, whose role is to flag up concerns about funds which Aylward and his team might select. 

The due diligence team has the power of veto over any of the funds chosen, and among the criteria it is looking for are key man risk, cyber security risk, and regulatory risk.