Advisers continue to shun investment trusts as platform sales stall, a new report has found.
A Platforum survey shows less than a quarter of sole adviser firms recommend investment trusts, falling to 4 per cent for firms with between 51 and 100 regulated individuals.
In the study of 286 advisers, among the 36 per cent who recommend investment trusts, the holdings make up only 5 per cent of their portfolios. Advisers who recommend more investment trusts are also those who hold the most ETFs in portfolios as well as direct holdings and venture capital trusts and enterprise investment schemes.
Sales of investment trusts on adviser platforms as a percentage of total sales remain static despite strong performance of investment trusts against the FTSE All-Share index, Platforum finds.
Advisers say the lack of liquidity and an inability to hold investment trusts in model portfolios are the major barriers to entry.
On platforms, advisers say the lack of access to information on products – which often requires a fee – and the additional charges put them off.
Only 7IM and Ascentric, from May 2017, do not charge for investment trusts’ trading costs.
Some advisers also regard the inability to trade fractional shares on platforms as a barrier, in the same way that obstacles exist to fractional share trading of ETFs.
Thameside Financial Planning Tom Kean says he has not been convinced yet on why he should use investment trusts.
He says: “I don’t understand them very well and it’s not been very well communicated over the years. If they were that positive we’ll use them so there’s a problem.”