The investment trust industry has funded everything from the building of railways across the US to the development of South American economies in the 19th century.
This history is both the sector's strength and weakness and, in the week when Investment Week recognises the excellence within the sector, it is worth examining the relevance of the investment trust structure in today's investment markets.
The weakness is that some individual trust boards continue to operate with the limited corporate governance that existed in 19th-century Britain, and some large generalist trusts have ignored the way markets have developed in the past 10 years.
One thing that can been said in favour of activist investors is they have put some of those boards under pressure to make them realise they operate investment trusts for the benefit for shareholders and not just themselves.
Equally, it is true to say none of the major management companies operate the same sleepy investment policies they did 10 or 20 years ago.
You can question the approach by the likes of Witan or F&C to use third-party managers in a funds of funds manner, but you cannot criticise them for not moving with the markets.
Big generalist trusts with global equity mandates will come back into fashion and, with markets as volatile as they currently are, now is a good time to take another look at them.
One of the industry's strengths has been its continuous promotion to private investors and the AIC should take credit for organising small events to promote trusts to private investors and this is something the IMA would do well to learn from.
The investment company market has proved very capable of embracing innovation in terms of structures and asset classes and this year's Investment Trust of the Year Awards shortlists encompass trusts from sectors as diverse as distressed debt, hedge funds, private equity, as well as single-country equity funds.
The closed-ended vehicle structure sits very well with some of these specialist or niche sectors that require long-term buy and hold strategies to avoid the volatility caused by fund flows in the more fickle open-ended market.
This is a major reason why more intermediaries should be actively analysing and using closed-ended funds on behalf of their clients, but the sector at the moment is only regularly used by a small part of the advisory community.
The vagaries of discounts and net asset values are among the excuses often quoted by doubters of investment trusts, leaving the cynical observer to think that commission is the real main reason. The more transparent charging structure is clearly one of the strengths of ITs and if RDR is implemented in its current guises as well as making advisers consider index funds and ETFs it will also mean they have to actively consider investment trusts.
It is always wrong to talk about a renaissance or the death of investment trusts, the fact of the matter is they never go away and the sector continues to be a source of both innovation and good investment returns.
What needs to change is not the sector, but the attitude of the broader advisory market because there is no credible reason for trusts to be ignored by advisers as widely as they are.
