Closed-ended benefits no more

Professional Adviser
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buybacks and lack of portfolio discipline have eroded the traditional benefits of trusts

Investment trusts are poorly suited to holding illiquid assets, despite claims that their closed-ended structure allows them to look through bear markets. That is the view of Alan Ray, head of investment trusts at Credit Lyonnais, who said share buybacks and lack of portfolio discipline among trust managers have eroded the benefits traditionally claimed for investment trusts over open-ended structures. 'The evidence that closed-end funds can hold illiquid assets and hence look through bear phases, and outperform, is scant,' Ray said. Citing the example of the Schroders UK Smaller Comp...

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