post-rdr investment trusts

RDR is likely to have only a marginal impact, if any, on the demand for investment trusts among financial advisers, according to more than a third of delegates at a recent conference on the investment vehicles.

post-rdr investment trusts

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Held by Winterflood Investment Trusts in London recently, 36% of respondents believed there would be marginal or no impact on the demand for investment trusts as a result of RDR, while only 11% thought the impact would be considerable.

Winterflood said this could be viewed as a "worryingly high response" given the audience "clearly has some interest in investment trusts", as shown by their attendance at the conference.

Liquidity in the investment vehicles was highlighted as a problem by respondents, with 82% saying secondary market liquidity was a significant issue for them.

Furthermore, only 6% of those surveyed believed discount control mechanisms had proved effective and 38% believed it is always an issue if directors do not own shares in their own trusts.

Previously, the advent of RDR has been cited as an opportunity for investment trusts to be considered on a level playing field with their open-ended counterparts.

With commission incentives stripped out, the wisdom goes there would be less motivation for advisers to discount closed-end funds when considering investment decisions.

On this vein Morningstar recently launched a ratings service for closed-end funds and commentators such as David Coombs, head of multi-asset at Rathbones, have come out in support of the vehicles if they can "clean up their cosy club image".

But increasingly it looks as if other issues are equally regarded by advisers as obstacles to investing in closed-end funds and these will have to be addressed if the sector is to take advantage of the post-RDR landscape.

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