The Gold, Silver, Bronze, Neutral and Negative scale is easy enough to understand and the criterion should make sense to fund pickers across the board. The methodology, we’re told, considers five key factors—people (manager and support research team), process, parent (including board of directors), performance, and fees.
However, there’s clearly a lot more work to do with just 32 of a possible 295 (excluding VCTs) companies included in the service so far. Others, we are told, would like to be included in the future, while some companies remain reluctant to be involved altogether.
RDR may well prove be the boost to the investment trust industry that the AIC expects it to be, but in being whole of market a truly independent adviser will have to demonstrate they’ve at least considered all of the options.
In many ways, picking an investment trust can be more complicated than choosing between their open-ended equivalents. The discount at which a trust trades must be considered as well as levels of gearing, both of which thankfully come within Morningstar’s criteria.
Without wanting to insult the intelligence of our readers, there remain plenty of advisers that for whatever reason still shy away from closed-ended funds. They need a whole lot more encouragement and, dare I say it, edification, before they become true believers in the advantages of the trust world.
“Access to research about investment companies is often cited by advisers as a barrier to their recommendation,” AIC director general Ian Sayers is quoted as saying. Fair enough, but handing out gold medals to a handful of the best trusts is not going to solve the problem.
The whole industry, including the AIC, ratings agencies, boards, platforms and IFA networks need to step up the pace collectively.
Do you use investment trusts? If not, why not? Let us know below.
