/ INVESTMENT TRUSTS /
ON BOARD
Investment trusts looked like losing their
long-held cost advantage over open-ended
funds
structural
improvement
in the level
of discounts.
Most trusts now
have buyback
programmes in
place, while some
even hold a zero
discount policy,
including BlackRock
Income and Growth
and Troy Income &
Growth.
Fees have also been an important
area of improvement. To some
extent, this was thrust upon
trustnetdirect.com
investment trust managers and
boards, who looked like losing
their long-held cost advantage over
open-ended funds after adviser
commissions were taken out of the
costs.
Plaskett points out that many
boards swiftly recognised the
problem and worked with the
managers of trusts to reduce
fees. Notable examples include
a number of the Baillie Gifford
portfolios, with Scottish Mortgage
dropping from an annual
management charge of 0.32
per cent to just 0.3 per cent. A
number of trusts also scrapped
unpopular performance fees,
including Standard Life UK Smaller
Companies and Fidelity China
Special Situations.
There is also an increasing
recognition by boards that
investors are using investment
trusts for income. The products
have certain advantages for
income-seekers, such as the ability
to reserve dividends when the
going is good to smooth payouts
over the long term, but in order to
tap into the post-retirement market
as part of a drawdown portfolio,
they needed to change the way
they paid dividends.
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