AJ Bell’s investment research director said investment trusts have been trading near historic highs relative to the value of their underlying holdings and warned some advisers may be missing critical checks in their due diligence.
He said: “Investment trusts remain in demand as they offer liquidity and the ability to access a broad range of themes, but the strategy of buying at a large discount and selling at a lower one is largely played out.”
His comments came following research carried out by AJ Bell among 540 advisers who use the Sippcentre platform which showed that 19 per cent of advisers were likely to incorporate investment trusts into their investment process.
Mr Mould said there were 10 key checks advisers should consider with the top three considerations being: the trust objective – income, capital appreciation or both; the investment style – growth, momentum, value or income; and the experience and performance track record of the fund manager.
Adviser view
Susan Hill, chartered financial planner of Hertfordshire-based Susan Hill Financial Planning, said: “I do my own due diligence but anything like this is helpful. Anything I can add from it to my own due diligence list is useful.”
