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Private investors and wealth managers becoming keener on investment trusts again

216 investors quizzed for the annual UK Investment Trust Study.

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Private investors who buy investment trusts are more positive about them than they were a year ago, according to a survey by Research in Finance.

The researchers quizzed 216 private investors and wealth managers as part of the annual UK Investment Trust Study.

They found three-fifths (60%) of investment trust investors described themselves as “fans” who prefer trusts to other kinds of investment. This was up from 55% the year before. However, the percentage is still below the record high of 64% saying this in 2021.

Other notable findings included 25% of investment trust buyers said they were “agnostic” about the vehicles, while 15% saw them as more specialist and only used them from time to time.

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The average age of respondents to the survey was 63, with “fans” being slightly older on average at 65 than non-fans at 61. Fans hold an average £305,000 in trusts, representing 56% of their total portfolio. The comparable figures for non-fans are £105,000 and 23%.

The study also found the biggest perceived benefits of investment trusts over other kinds of fund, such as Oeics (open-ended investment companies), include the fund manager not being forced to sell to meet redemptions, mentioned by 68% of respondents, and being able to buy or sell shares in investment trusts quickly (57%).

Dividend smoothing, pointed to by 55% of those spoken to, and long track records of dividend growth (49%) were also major plus points. Only 3% of respondents saw no benefits in investment trusts over an Oeic.

A third of respondents (33%) said they expect to invest more in investment trusts over the next six months, with 57% expecting to invest the same, and 9% less.

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Among those looking to invest more, the top reason was attractive discounts to net asset value, mentioned by 85% of respondents.

Nick Britton, research director at the Association of Investment Companies (AIC), said: “It’s encouraging to see sentiment towards investment trusts improving towards the end of last year, with more respondents describing themselves as fans than we saw in 2022.

“Clearly, the benefits of investment trusts are well recognised among this group, including the fact that they are not forced sellers of assets into down markets.”

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Abbie Hines-Lloyd, senior research manager at Research in Finance, added: “This wave of our survey captured an increase in positive sentiment for investment trusts as discounts were bottoming out towards the end of October.”

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