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&#39Barbell trusts may shatter confidence&#39

Investment trusts managed with a barbell approach could shatter investor confidence in the entire investment trust sector, according to research by Edinburgh University.

The research also criticises the so-called “magic circle” of split-capital investment trust managers, who all hold shares in each others trusts.

The research, published in the Journal of the UK Society of Investment Professionals this month, criticises barbell trusts as being both riskier and more costly than most trusts due to their higher levels of gearing.

The report says the negative publicity which they are set to generate when they inevitably hit hard times is set to damage the reputation of the whole industry.

Barbell trusts hold two distinct portfolios – a growth portfolio which invests in a specialist investment sector and an income portfolio comprising bonds and high-yielding investment trusts.

The research highlights the case of the Framlington NetNet trust, which last week announced it was to liquidate its income portfolio to repay its bank debt. As a result, the fund&#39s net asset value has fallen below £8m, some 92 per cent below the £100m raised at its launch last March.

Report authors Dr Andy Adams and Robin Angus say: “Initial and recurring costs to ordinary shareholders of barbells are much higher than they may appear at first sight. Our motive in writing this article is to increase investor awareness of the issues and risks involved.”


Exeter Investment Group – International Growth Portfolio

Thursday, 5 April 2001.Type: Unit trust.Aim: Growth by investing in the managed growth fund, global opportunities fund and Pacific growth fund.Minimum investment: Lump sum £1,500.Investment split: Managed growth fund 50 per cent, global opportunities fund 25 per cent, Pacific growth fund 25 per cent.Yield: Nil.Isa link: Yes.Pep transfers: Yes.Charges: Initial 5 per cent, annual 1.25 […]

Edinburgh Dragon Trust down

The net asset value of Edinburgh Dragon Trust fell by 12.9 per cent in the six months to February 28, 2001.The fall compares to a fall in the MSCI Combined Asia Free ex Japan benchmark index of 15.5 per cent, outperforming it by 2.6 per cent.Edinburgh Dragon Trust chairman Tony Cassidy says: “Whilst in the […]

Living on an island

The first phrase that comes to mind when I look at the difficulties being experienced by the managed funds industry&#39s struggling e-commerce initiative EMX has to be “I told you so.” Over the last two years, the project has exhibited classic symptoms of a service doomed to failure. The biggest problem is that the managed […]

Scottish Legal Life – 5 Year Guaranteed Investment Bond – 2001 Issue 2

Monday, 2nd April 2001.Type: Guaranteed unit-linked bond.Aim: Growth by investing in Scottish Legal Life higher yield fund.Minimum investment: £3,000.Fund links: Scottish Legal Life higher yield fund.Allocation rates: Investments up to £5,000 – 100 per cent, £5,001-£9,999 – 102 per cent, £10,000-£19,999 – 103 per cent, £20,000-£49,999 – 104 per cent, £50,000-£99,999 – 105 per cent, […]

The Great British Break-Off

Despite predictions that a vote to leave the European Union would result in an economic apocalypse, UK equities have shown the market equivalent of a stiff upper lip: bouncing back, keeping calm, and carrying on. Although the road towards Brexit remains clouded in uncertainty, UK equities offer a range of opportunities to investors seeking returns […]


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