AIC's Sayers: The industry's biggest challenge of the next five years
'Polarised results' for investment trusts
Ian Sayers, chief executive of the Association of Investment Companies (AIC), tells Jayna Rana about why the FCA Asset Management Study disappointed him, the "polarised results" he expects to see across the investment trust world and the industry's biggest challenge of the next five years
Having worked at the AIC for 20 years and led the trade association as its chief executive for the last eight, it is safe to say Ian Sayers knows a thing or two about investment trusts.
Joining the organisation under the leadership of former director general Daniel Godfrey in 1998 as technical director, Sayers worked his way up as the sector grew almost three-fold from a £60bn industry in the late 1990s to just under £175bn at the end of last year.
Sayers says he has seen a number of investment cycles during his tenure so far, as well as a significant amount of change across the industry.
"I can think of three or four occasions when the demise of closed-ended companies has been predicted, be that due to regulation, changing investment needs or something else, but instead the sector has evolved," he says.
"More recently, the rise of alternatives has seen people realise the closed-ended structure is better suited to investing in asset classes such as infrastructure, renewables and specialist forms of debt.
"This area represented only 5% of the sector when I started 20 years ago; now it is about half."
Adviser trust purchases soar to record highs thanks to UK property and private equity demand
In particular, Sayers highlights the aftermath of the Brexit vote in June 2016, which saw a number of open-ended property funds forced to suspend trading following huge outflows.
Discounts on property investment trusts widened, creating a value opportunity for investors before rapidly narrowing, but demand has continued.
He says: "People still think an open-ended fund is the safest option but the property fund saga gave them pause for thought. It helped investors realise putting illiquid assets in an open-ended fund can cause severe problems."
Improving education
However, he still believes there is a long way to go to increase the popularity and understanding of investment trusts and this should start with education, not just within the industry but at schools from an early age.
"Personal finance education is crucial. Often the barrier to investing is getting started and if young people are encouraged to invest just £25 a month they would be surprised how quickly that can grow," he says.
"It should be part of the curriculum, if only to help the man on the street avoid danger spots like falling into debt."
Sayers identifies this as just one of the ways to improve the perception of the financial services industry in general; a reputational issue which has been prevalent for years and was only heightened by the fall-out from the global financial crisis in 2008.
Other measures have come through new regulations and work such as the Financial Conduct Authority's Asset Management Market Study.
About the author
Jayna is senior reporter and investment trust correspondent at Investment Week. She joined the publication in August 2015 after graduating with an MA in Multimedia Journalism from the University of Kent.
Jayna holds the NCTJ diploma and has experience in print, online and broadcast journalism. She is responsible for the Investment Week monthly podcast.
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