Reflections on the benefits of mirror funds

Some readers may not be aware that some of the most well-regarded fund managers in the UK also run investment trusts.

Often these have similar holdings and positioning as their more well-known open-ended funds. In many cases, they are also cheaper to invest in, and offer the potential for superior performance to investors who understand the nuances of the wider market. In the absence of a better term, open- and closed-ended funds that are near identical and run by the same manager can be called ‘mirror funds’. The main differences between open- and closed-ended funds, aside from the obvious ‘fund vs company’ structure, are ones of gearing, fees, liquidity and discounts. In combination, these four fac...