1) Investment trusts are too complex. Investment trusts are best understood as funds, like Oeics, which can usually be purchased for less than their value of their assets (the discount). The AIC provides free training for advisers, both online and face-to-face, to help them improve their understanding. 

2) Investment trusts are highly geared. Just over half of investment trusts have no gearing at all; and the average gearing across all investment trusts is just 6 per cent (£6 of borrowing for every £100 of net assets). 

3) Investment trusts are too risky. Because of discounts and gearing, the volatility of an investment trust can be greater than that of an equivalent Oeic.

This is why investment trusts should be considered long-term investments and used when better long-term performance is more important than minimising short-term ups and downs.

Some investment trusts have discount control policies in place to try to limit the volatility of the discount/premium. 

4) Investment trusts are cheaper/more expensive. It’s hard to generalise about fees and charges. Some investment trusts have very low costs, far lower than a typical open-ended fund. Other, more specialist trusts are more expensive.

Decisions need to be made on a case-by-case basis. It’s worth noting that over a third of investment trusts have reduced their management fees since RDR, and over 40 have abolished performance fees.

5) Investment trusts are illiquid. The largest quarter of investment trusts see well over £1m worth of shares traded every day, according to Winterflood Securities.

This should be ample liquidity for the vast majority of advised clients. Advisers worried about liquidity may want to avoid the very smallest investment companies, which are much less liquid.  

The barriers to advisers using investment trusts may be mostly due to habit, with open-ended funds appearing more familiar and easier to use.

However, with a little effort, it should be possible for advisers to master the differences between investment trusts and open-ended funds, to compare one vehicle with another, and select the most suitable in each case. If advisers shop around in this way, it can only be to the benefit of their clients. 

Nick Britton is head of training at the Association of Investment Companies