Oh dear I cannot agree with this no matter how well promoted Sally Bowles is.
Sharon’s point is that Investment Trusts are valued by those who invest in the long term and that a lot of value is being lost by not investing in them. “Value” is not just a matter of maths , it is about outcomes and we need to measure the returns on investment companies in the past and consider for the future.
I am a fan of some investment funds and agree that they are potentially offering more value than unit funds which charge more for doing the same – nothing.
But I don’t think we can throw out the value offered by both passive and active funds based just on the value for doing nothing , that investment trusts/companies achieve.
Sharon Bowles is doing great work in the Lords and with Ros Altmann has been championing Investment Trusts/Companies. Her point is that these investment vehicles can do more than many funds which see money go overseas, where high charges aren’t justified by management and where the focus on growth is second to “de-risking”.
If we simply argue on charges, we miss the real question as to whether to buy investment companies share or pay annually for fund management.
Do I see investment companies appearing on many trustee horizons but I may be inexperienced. I do not see much talk of them at conferences or in the pages of professional investor magazines.
I hope that including this blog among others, I may get a better view of our reader’s thoughts. The comment pages are open for your views.
Very interesting debate. Will we be getting investment mandation for pension schemes under the “growth” mantra?
Slightly off beam – but perhaps related:
In relation to a pension scheme switching investments into a package of fixed interest Gilts of differing durations to match the projected cash flow liabilities of the scheme as an alternative to a buy-in but with upside risk, I have questioned why the investment manager’s platform requires the scheme to hold them in a series of fixed date gilt accumulation funds. The alternative would be for the scheme to hold the underlying Gilts directly to receive the interest payment directly into the Scheme’s bank account to pay the current pensions rather than have to set up a monthly “standing order” of sales of the capitalised units. The investment manager also charges an annual investment manager fee of 0.0n% on the holding – for what?
My personal online SIPP allows me to hold Gilts directly. The pension scheme investment consultant advises that the pension scheme would incur substantial administration and governance costs if it seeks to hold investment directly than through an investment manager.
Is this not another case of the legislative and regulatory regime seeking to protect the incumbent industry against innovators and disrupters?
Recently I was asked to comment on the placement of £10M of units giving RPI+x% return for 9 years.
An illiquid market but much talked about long term investment (THIS WAS 30 YEARS DURATION INITALLY.)
The interested parties say that due dilligence costs make this too small an investment. It is also a problem for smaller funds where the PI and compliance prevents the adviser considering the investment b a SSAS or a SIPP.
Motivation for the sale the IHT 70% tax charge from 2027 and the desire to buy an annuity now.
Innovation… a myth Any suggestions on how to reslve?