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Dampier poses questions over niche market

Investment trusts are “a pain” for advisers to sell and will always lend themselves to a niche rather than mass market, claims Hargreaves Lansdown head of research Mark Dampier.

At a Money Marketing round table on investment trusts last week, Dampier said the fundamental question that needs to be answered is why should advisers sell investment trusts?

He suggested that illiquidity was a major barrier to him offering investment trusts to clients in a major way, as well as issues over complexity and lack of client understanding of some aspects of trusts.

Dampier told the meeting that he could not offer the investment trusts he has in his personal portfolio to his clients as he could not get the quantity that he would with other funds, given that Hargreaves Lansdown typically might be looking to place £20m or so at a time.

He said although the investment trust industry is trying to market itself more widely, it will always be a niche as it is easer for advisers to take the Oeic route.

Dampier said: “The question is why should we? There are plenty of Oeics around offering great performance, which I have no problem buying or selling at any time, and investment trusts are a complete pain to buy and sell.”

But Transact managing director Ian Taylor said Hargreaves Lansdown is not typical of the adviser market and none of the 2,000 advisers using Transact has reported issues over liquidity.

Taylor claimed that people use complexity as an excuse for not investing in investment trusts but Oeics can be just as complex and either option could suit advisers while anxiety over investment trusts has become a self-fulfilling prophesy for some.

He said: “This whole debate depends on what type of adviser you are talking about. My view is that the complexity issue is just used as an excuse and there are plenty of advisers for whom investment trusts can be an attractive route.”

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