The Victorians understood that the average investor wanted a return on their capital, and one as high as possible consistent with the safety of that capital. The structure pioneered by F&C has survived the test of time.
Incorporation as a company means an investment trust is able to write off its costs before tax, and to hold back income in the good years to help with the bad years (which always come eventually). But it also creates the necessary hierarchy to ensure performance – a board responsible to shareholders for overall strategy, and an investment manager responsible to the board for the tactical implementation of that strategy.
Or as the AIC sums it up: “The closed-ended structure, ability to gear, income benefits and independent boards are unique features that deliver strong, long-term performances for investment company shareholders. Investment companies are the ideal vehicles for active managers, giving them the tools they need to deliver benchmark-beating returns.”
