/ MULTI-MANAGER TRUSTS /
ONE-STOP SHOP
as a two-part portfolio – one part focusing on income and the other focusing on growth – but under one corporate structure , Hewitt is able to “ cross-subsidise ” the level of income in one fund with another , balancing out the capital growth in both . This allows him to maintain a more consistent dividend payment without having to take on unnecessary risks to do so .
THE TRADE-OFF Hewitt says that as a result of gearing , most closed-ended funds outperform their open-ended counterparts over the longterm , but the trade-off from a multi-manager ’ s point of view is liquidity . He cited the experience of his open-ended peers Gary Potter and Robert Burdett , whose F & C MM Navigator Distribution fund has £ 1.2bn in AUM .
“[ Due to their size ], Gary and Rob will likely want to buy £ 50m
“ Funds of trusts have to cope with heightened governance where the overarching vehicle is itself closedended ”
or £ 20m of a trust and you can ’ t do that with all trusts , so you have to be more selective and patient .”
With liquidity a defining characteristic of investment trusts , it makes them a natural home for alternative assets . This is what the Henderson Alternative Strategies Trust ( HAST ) seeks to profit from by investing in closed-ended vehicles in the more esoteric areas of the market . Manager James de Bunsen , who also runs openended multi-manager portfolios at Janus Henderson , says the main difference between the structures is the extent to which you are forced to prioritise liquidity .
“ If the market backdrop changes , we don ’ t want to become forced sellers , we want those decisions to be ours rather than end up skewing a portfolio because we ’ ve had to sell 50 per cent of our holdings to meet redemptions . So we find that daily dealing is a comfort to investors .”
So while HAST is designed to take advantage of the more illiquid nature of non-traditional assets , giving investors a door to otherwise less accessible areas of the market , de Bunsen is mindful not to invest solely in illiquid assets .
“ Investors don ’ t necessarily want that and you are likely to attract a discount at the trustnet . com 9