We have recently read a publication from Hargreaves Landsdown: “Why we still do not push investment trusts post-RDR”. HL argue that ITs are not suitable for large-scale fund buyers (they are talking of amounts of £50m here!!). They appear to suggest that they are not sufficiently liquid and that Net Asset Values (NAVs) are not recorded on a daily basis, which makes it difficult to gauge a company’s valuation.
Many of these trusts are more than 100 years old and have provided superb returns to investors, so much so that by using them we as a firm we have provided superb returns for our clients. Furthermore, they are inexpensive to purchase and the annual management fees are far lower than open-ended funds, which HL seem to favour. We agree that discounts may be too narrow at present and that premiums may be too high, but there is still great value out there!
Investment trusts were never designed for bulk purchasing, rather they are for the smaller, relatively sophisticated investor, who is looking for long-term growth.
This gives further impetus to the need to appoint an adviser who is unrestricted and helps you create your own bespoke portfolio.