Hargreaves could land £420m from Witan trust

£1.8bn investment trust is the latest to shutter its savings scheme


Hargreaves Lansdown will be the key beneficiary of Witan Investment Trust shuttering its savings scheme due to increasing regulatory cost and the growth of investment platforms offering a greater array of services.

Letters have this week been mailed to 16,000 account holders, who can accept the default option of switching to Hargreaves or opt to transfer assets to an alternative investment platform. The savings scheme represents £420m, almost a quarter of the investment trust’s £1.8bn assets under management.

Association of Investment Companies communications director Annabel Brodie-Smith told Portfolio Adviser investment trust savings schemes began in the 1980s but there has been an increasing trend to stop running them in-house. “It’s been going on for a number of years.”

Remaining investment trust savings schemes offer investors schemes to save as little as £30 a month or a £250 lump sum with purchase costs ranging from nothing to £10 a pop.

Only the big players left

Witan appears to be the last independent investment trust to abandon its in-house savings scheme. “They tend to be big asset managers that still run the schemes,” said Brodie-Smith.

“There is a cost involved in running these schemes and it’s also very much so because more and more investors are choosing to run their investment companies on platforms, because clearly they have great choice there, they can have access to lots of different investment companies from different management groups, it’s convenient to have them all in one place.”

A Hargreaves press release announcing the transaction said it was the seventh transfer of a savings scheme to a platform. Other transfers include:

  • RIT Capital Partners
  • Legg Mason Investment Trusts
  • JP Morgan Investment Trusts
  • Jupiter Investment Trusts
  • Blackrock Investment Trusts
  • Old Mutual Global Investors

However, JP Morgan still offers savings schemes across 24 investment trusts, according to data from the AIC, with only its Sipp involved in the transfer to Hargreaves. It joins Aberdeen Standard Investments, Baillie Gifford, and BMO Global Asset Management as the asset managers that offer investment trust shareholders a saving scheme.

Letter to shareholders

The letter states it is unreasonable for Witan shareholders to bear the costs associated with the scheme and said account holders are better served by the increasing variety, capability and cost effectiveness of a specialist investment platform.

The changes affect savers in the Witan Wisdom and Jump Savings schemes.

Witan Investment Services chairman Harry Henderson (pictured) said savers would benefit from better flexibility at an improved cost at Hargreaves Lansdown. Dealing charges on the Witan savings scheme were £15 via phone or online, although Junior Isas were exempt from charges, while on Hargreaves charges range between £5.95 to £1.95 depending on how many trades are conducted a month. Hargreaves charges Junior Isa accounts £5.95 a trade.

Henderson said: “There is an increasing range of savings platforms offering a broader array of services than those available to Witan Savings Scheme investors. Coupled with this, in recent years there has also been a substantial increase in the regulatory cost associated with the provision of the schemes which has been borne by Witan shareholders as a whole.”

He said Witan Investment Services will be doing all it can to ensure the “necessary process” will go as smoothly as possible.

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