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AITC drive: &#39its&#39 or miss?

As the AITC&#39s “its” campaign moves towards its second year, the decision to slash the advertising budget and switch agencies has not sent out the message of success the AITC would have wanted.

After an extensive £17m TV and billboard campaign, funded largely by AITC members, expectations were high in the investment trust industry.

But the second year&#39s ad budget has been cut to £8m while agency Radical has been dropped in favour of Howell Henry Chaldecott Lury.

The ups and downs of the “its” campaign have left investment trust managers and IFAs with feelings varying from optimism to disillusionment.

The campaign&#39s principal aim – to raise public awareness of investment trusts – was a formidable task given the complexity of the product compared with the simpler and more popular unit trusts and Oeics. Much of the criticism of the campaign has come over its attempt to pitch at a broad audience.

The British public remain largely financially uneducated relative to countries such as the US and Australia. It is only slowly that even a general understanding of Isas is starting to grow.

But IFA Christows head of investment trusts Nick Greenwood believes the first stage of the “its” campaign has been a success despite negative press reflections.

He says: “No one is going to wake up in the morning and buy Murray emerging markets or the like because of the &#39its&#39 campaign. It is up to the company to seal the business. But the whole atmosphere towards investment trusts has definitely changed in the past year.

“Demand for investment trusts is increasing through initiatives such as the campaign, while supply is declining through buybacks. The step-change in discounts is much closer than people think.”

Greenwood is not alone in his optimism towards the campaign. Most of the bigger investment trust houses believe discounts will start to narrow in the near future, which can be accounted for at least partly by the campaign. But many of the smaller houses remain sceptical, along with much of the media.

IFA Hargreaves Lansdown launched its own investment trust recently and has emerged highly sceptical of the campaign. Chairman Stephen Lansdown says: “One of the main objectives of the &#39its&#39 camp-aign was to raise awareness of investment trusts but the proof of that is actually seeing people investing into the funds.

“The only way you can judge is by looking at the share price and net asset value. I can see no evidence to show the discounts have narrowed over the past year and, if anything, they have contin ued to widen.”

Although Hargreaves Lansdown is not yet a member of the AITC, it intends to join in the near future. But Lansdown says the firm will not be contributing to the “its” campaign and believes it would best be stopped altogether.

Yet few IFAs express such a negative attitude towards the project, which could only ever have been of benefit to them. Alongside the extensive ad campaign, “its” has also included a strong educational drive through pamphlets and books.

Bates Investment senior analyst James Dalby says: “It was useful in that the information which the AITC put out at first was good training material for our advisers. I think it has been positive for the industry but I do not think it has had a massive impact.”

The AITC maintains the first stage of the campaign has been a success and that much of the criticism has come from those who are failing to see the bigger picture. Changing its ad agency was clearly a big decision but the AITC has played down the importance of the move, insisting that phase two of the campaign will be run on a different tack.

PR manager Annabel Brodie-Smith says: “Over the last year we have focused on putting investment trusts on the map but in the next phase we will be looking at distribution as well.

“Next year, quite a significant chunk of the campaign is going on developing the generic product for IFAs. It is going to allow them to get standard rates of commission on investment trusts and it is going to simplify the process. Seventy per cent of the investment trust market is through IFAs so they are very important to us.”

With most of the big investment trust houses on its side, the “its” campaign can comfortably ride a period of negative press coverage. But, having played down the first stage of the campaign as laying the foundations, the AITC is under pressure to produce more concrete results in the next 12 months.

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