Trustnet Magazine Issue 11 October 2015 | Page 18

INVESTMENT STRATEGY SMALL CAPS COMPARING TRUSTS WITH OPEN-ENDED FUNDS ON A SHARE PRICE VERSUS NAV BASIS IS A “FALLACY” 16 trustnetdirect.com trustnetdirect.com IT UK Smaller Companies (133.15%) 100% 80% 60% 40% 20% 0% Mar 15 Sep Mar 14 Sep Mar 13 -20% Sep Innes Urquhart, a research analyst at Winterflood, says that smaller companies is one area of the market in which the closed-ended structure can really add value to the overall investment process. “Because the funds are closedended, the respective managers have no worries about inflows and Williams launched the Miton UK MicroCap trust in April this year. It raised £50m during its initial public offering and has now grown to £59m. At launch, the manager said the investment trust structure added real value for shareholders as it meant he did not have to worry about inflows and outflows. While noting the benefits of investment trusts, City Asset Management’s head of research James Calder says comparing them with open-ended funds on a share price versus NAV basis is a “fallacy” in terms of what you end up with. “If you compare NAV versus NAV, you will find that the performance is probably a lot closer,” he explained. 120% ()5