IT Anonymous: How buybacks and mergers can rejuvenate sector

In less than three months, investment trusts will sit on a level pricing playing field with open-ended products for the first time, as the industry says goodbye to trail commission.

Advisers’ preference for commission-paying, open-ended funds has left the closed-ended sector out in the cold, holding just £90bn in AUM compared to £460bn in unit trusts. Research carried out last year by J.P. Morgan Asset Management revealed only 0.4% of IFAs use investment trusts. This figure should begin to rise from January as IFAs do their homework and become more familiar with the sector, recognising the virtues of the closed-ended structure. Most notably, these include the ability to build up dividend reserves to smooth future payouts, lower charges, and the potential for str...