Easier Access To Investment Trusts Critical To Their Future - Survey

Wendy Spires Deputy Editor 17 November 2009

Easier Access To Investment Trusts Critical To Their Future - Survey

New distribution channels which provide investors with easier access to investment trusts will be key to the sector’s future, according to a survey of investment trust directors conducted by JP Morgan Asset Management.

Among the 1000 investment trust directors polled, an overwhelming 94 per cent said they saw greater mainstream retail distribution as critical to the future of investment trusts. In order for investment trusts to garner a larger retail shareholder base going forwards, close to half of those surveyed (42 per cent) viewed direct platforms as a key channel, while 35 per cent highlighted financial advisors as an important means of increasing investor uptake.

Related to this last finding, the survey revealed a widespread feeling that advisors are not pushing investment trusts sufficiently, with 49 per cent of participants saying that intermediaries’ lack of focus towards investment trusts is the biggest barrier to their growth. Commission/fee structure and discount issues were also considered to be significant hurdles, following at 42 and 35 per cent respectively.

According to David Barron, head of investment trusts at JP Morgan Asset Management, technological and regulatory changes have created a wealth of new opportunities for investment trusts. He notes, for example, that the UK regulator’s Retail Distribution Review has proposed that in order to be deemed independent advisors should include investment trusts in the range of products they consider for their clients. Changes such as these have the potential to increase levels of knowledge about investment trusts, which, coupled with changing attitudes, could effect a significant uptick in demand.

“Investment trusts have always been a superb vehicle for private investors and finding a way to access these investors is key. The shift in focus to mainstream financial advisors and online channels, such as fund supermarkets, has demonstrated a changing attitude in the sector,” said Mr Barron.

“The swing presents a challenge in terms of building demand for investment trusts by targeting a wider audience and ensuring investors can easily buy and sell them. As a result it is essential that investment trusts use as many tactics as possible to make them more accessible and appealing, including marketing, education and access to platforms.”

JP Morgan Asset Management has itself made several moves to increase access to investment trusts, such as supporting the efforts of the Association of Investment Companies to introduce investment company centres to online research and broking websites. The firm has also launched JP Morgan Wealth Manager+, an online wealth management service for private investors aimed at increasing accessibility.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes