Square Mile adds investment trusts to Academy of Funds

The fund research house has given ratings to 18 closed-ended funds

Jock Glover Square Mile
James (Jock) Glover


Square Mile Investment Consulting and Research has expanded its Academy of Funds rating scheme to include investment trusts. 

The fund research house has given ratings to 18 closed-ended funds across a range of asset classes, geographies, and investment objectives. The list will be expanded over the coming months.

Square Mile has always assessed investment trusts as part of its consultancy services, but this is the first time the research has been made publicly available and formalised through ratings.

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The firm said that investor demand for strategies that offer access to alternative and private assets continues to grow, and the investment trust structure is well suited to provide exposure to these less liquid asset classes.

The analysts’ approach will be similar to that applied to open-ended funds, including regular face-to-face meetings with the managers.

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Square Mile said there are certain elements that are particular to closed-ended investment vehicles and therefore the approach will also include assessments of a trust’s board, the discount control mechanism, gearing and income distribution.

The ratings awarded to investment trusts will mirror those that are currently given to open-ended investment funds. 

A, AA, and AAA, reflect Square Mile’s conviction in an investment trust’s ability to deliver on its stated objectives and ability to meet investor expectations. P+ (Positive Prospect) is awarded to investment trusts which the analysts consider as having the potential to be ‘highly compelling propositions’, but where there are some elements the analysts need more time to assess to be satisfied they merit a full rating.  

Responsible ratings are awarded to funds with a responsible outcome or target incorporated into their objectives or mandate. They follow the same gradations; A, AA, AAA and P+.

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Jock Glover, strategic relationships director, said:  “It is a natural evolution of our research to include closed-ended investment vehicles within the Academy of Funds, with ratings that reflect our analysts’ conviction in the strategies’ potential to meet their investment objectives consistently.  This furthers our driving objective of helping advisers and fund selectors make informed decisions over suitable investment options on behalf of their clients.” 

Richard Stone, chief executive of the Association of Investment Companies (AIC), commented: “We warmly welcome the inclusion of investment trusts and companies in the Square Mile Academy of Funds.

“Investment trusts have strong long-term performance, unique income benefits, independent boards of directors and are particularly suitable for illiquid assets like property or infrastructure. This research and these ratings will be helpful to advisers looking to select suitable investment trusts for their clients.” 

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