Despite the apparent lack of enthusiasm from advisers, Mr Stoakley does identify some significant growth since RDR, although it might not be deliberate. There has been a growing trend for outsourcing investment to discretionary fund managers (DFMs) which are, according to Mr Stoakley, the principal users of investment trusts, as they were before the RDR. “Demand for investment trusts is steadily growing from financial advisers but indirectly; more IFA-controlled assets are going into investment trusts but via DFMs,” he says.
He does not anticipate any more direct adoption of investment trusts either: “In an ideal world, of course IFAs should embrace investment trusts. But it’s quite a complex addition to your business, particularly if you have an open-ended equivalent. And let’s face it virtually every investment trust has an open-ended equivalent in one way, shape or form.”
However, Mr Stoakley does identify at least one good growth opportunity in the closed-ended world. “Where the closed-ended world is great is that its structure allows asset managers to be more creative, particularly in alternative spaces.” He identifies infrastructure, physical property, private equity and, generally, “illiquid underlyings that don’t lend themselves very easily to an open-ended structure, so that’s where you’re seeing the growth in the investment trust market and that’s where it will continue.”
Douglas Abbott, the firm’s outgoing investment trusts business development manager, agrees, “A broader number of investors are more willing to invest in investment trusts where the liquidity profile of the underlying investment is not very good and therefore you’re giving it a more liquid format.”; Stephanie Carbonneil, who is replacing Mr Abbott when he leaves to head up Schroders’ business development in South Africa, further supports this message. “It’s the perfect vehicle for that kind of suggestion. If you’re after any income and you want to buy into property or infrastructure, it’s the ideal vehicle.”
When asked about expanding beyond the nine investment trusts it currently offers, Mr Stoakley is more bullish, saying he would love to launch closed-ended funds covering Europe, US mid-and small-caps and physical property.
