Wealth managers feel more positive about investment trusts than they did a year ago, a new survey of discretionary fund managers has revealed.
The study, conducted by Research in Finance, found 28% of DFMs who use trusts expect to be writing more investment trust business over the next six months, compared to 9% who expect to write less.
The figures equate to a net score of +19%, up from +15% last year and close to the all-time high net score of +20% seen in 2022 and 2024.
Among those who said they would be using investment trusts more, the key reasons include attractive discounts (56%), the strong performance of certain trusts (51%) and a desire to increase exposure to specialist areas (36%).
However, the study found that the importance of these factors has shifted. Discounts cited by 56% of respondents was down from 68% last year, while strong performance was up from 39% a year ago and marks the highest percentage of respondents citing this factor since 2019.
The fourth and fifth most commonly cited factors behind improved sentiment were improving liquidity of certain trusts (29%, up from 22% last year) and management fee cuts (29%, up from 15%). The percentages of respondents naming each of these factors were the highest since 2019.
The study also found that emerging markets is the investment trust sector expected to perform best over the next 12 months, with 44% of DFMs tipping the sector. Technology followed in second place, favoured by 37% of respondents and the US in third place (32%.)
Nick Britton, research director of the Association of Investment Companies, said: “The investment trust landscape has been changing rapidly, with the average trust becoming larger and more liquid.
“This research suggests that these changes have been welcomed by wealth managers, who mention stronger performance, better liquidity and lower fees as reasons for using trusts more. Although discounts have narrowed, they’re still a key attraction for those looking to use trusts more in the coming months.”
Oliver Crawford, research manager at Research in Finance, added: “While wealth managers have long acknowledged the value of investment trusts, concerns about liquidity and cost disclosure have been important barriers to further use. Our research shows that wealth managers are becoming more positive on both these fronts.”
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