There are also investment trusts that invest in infrastructure projects, private debt, private equity, social impact investments, song royalties and venture capital.
In most of these cases there are no open-ended alternatives. Where these exist, they often work by investing into the investment trusts – at the cost of an additional layer of fees.
It is also worth mentioning the increasing number of investment trusts that invest in mainstream equities, but have a portion of their portfolio invested in unquoted companies.
It went very wrong with Neil Woodford, but the closed-ended structure of an investment trust means no trading suspensions or forced sales. Scottish Mortgage, Fidelity China Special Situations and Baillie Gifford Shin Nippon are among the investment trusts whose mandates allow them to invest in unquoted companies, which can be a fruitful source of growth opportunities as public markets slowly continue to shrink.
In conclusion, investment trusts can be suitable for a range of clients, not just those with a high appetite for risk.
Depending on individual client needs, investment trusts can offer reliable streams of income, the opportunity for strong long-term growth, and access to less liquid assets in a stable, closed-ended structure.
The AIC offers free training on investment trusts to all advisers and if this is of interest, we would be delighted to hear from you.
Nick Britton is head of intermediary communications at the Association of Investment Companies
