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Investment Companies
We are an enthusiastic advocate of the ‘City’s best kept secret’, the Investment Trust or Investment Company. These quoted vehicles exist solely to invest, allowing investors to make a single investment into a much larger portfolio.
There are around 400 investment trusts listed on the London Stock Exchange, the oldest being the mighty F&C set up in 1868.
They have several advantages over their unit trust and OEIC cousins;
- As public limited companies, investment trusts have their own independent boards of directors whose duty is to look after the interests of their investors. This includes selecting the fund managers to run the underlying assets as well as replacing them should they feel a change of manager is needed. This can be achieved without any personal tax liability to the shareholders.
- They can provide access to alternative assets that can otherwise be hard to buy or sell by investors in areas such as private equity, infrastructure, property and social & environmental impact investments.
- They have the ability to smooth the income payments they pay out each year by reserving income in good years to pay out later regardless of market conditions. There are several trusts that have increased their dividend every year for over 50 years led by the City of London Investment Trust having done so for 57 consecutive years.
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The negative impact of consolidation among wealth managers that was prejudicial to buying investment trust companies for their investors, has created an opportunity for the new smaller boutiques to include investment trusts in client portfolios.
Nick Greenwood
Premier Miton Worldwide Opportunities Fund.
