Closed-ended funds outstrip open-ended, says study

11 February 2011 1:59 pm | By Adam Lewis

Investment trusts have outperformed open-ended funds in eight of nine key sectors over 10 years in net asset value terms, according to research from Collins Stewart.

Only including sectors where a direct comparison can be made, the research shows that only closed-ended funds in the UK small cap space underperformed their open-ended peers over 10 years in NAV terms.

Over the same time period, while seven out of the nine closed-ended sectors outperformed their respective benchmarks, open-ended funds underperformed their relevant benchmarks in all nine key sectors.

Alan Brierley, an analyst at Collins Stewart, says that over the past 10 years the open-ended industry has seen funds grow 121 per cent from £261bn to £578bn. Over the same time period, closed-ended assets have expanded from £79bn to £93bn.

“While it is impossible to quantify the impact of commission paid to so-called ’independent’ advisers, it is fair to say superior NAV performance has certainly not been the key driver,” says Brierley.

In terms of total price returns, investment trusts outperformed open-ended funds in eight of the nine key sectors, most of which, says Brierley, was by a significant margin.

The nine sectors were: Asia Pacific ex Japan, Europe ex UK, global emerging, global growth, global growth & income, UK growth & income/UK equity income, UK growth/UK all companies, UK small cap and North American.

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