Closed-ended, not closed-off: The truth behind trust liquidity

David Barron, head of investment trusts at J.P. Morgan Asset Management, responds to concerns over the liquidity of closed-ended products.

Some commentators have questioned whether investment trusts will be able to deal with the increased fund flows many expect after the implementation of the Retail Distribution Review. However, the debate about investment trust liquidity is much more complex than is often portrayed. As the benefits of investment trusts become more widely known, there is a perception they will find it difficult to satisfy a rise in demand for the limited number of shares they have in issue, which is a feature of their structure. The worry is a lack of liquidity could cause delays when buying or selling s...