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Investment trusts cost less than 1 per cent

Association of Investment Trust Companies research on conventional investment trusts suggests for a significant proportion of investment trusts a 1 per cent charge cap could be comfortably met.

The research comes after the Treasury has announced a 1.5 per cent cap on its Child Trust Fund, which is able to include investment in equities.

Althought AITC commissioned research by Fitzrovia International shows for the global growth sector alone, some 63 per cent of AITC Member trusts have Total Expense Ratios of under 1 per cent. In the UK growth sector and the UK growth & income sector 50 per cent of trusts cost less than 1per cent. Many of these trusts have been serving private investors for decades and include some of the oldest and largest investment trusts.

AITC communications director Annabel Brodie-Smith says: “Investment trusts can be an ideal way to give children a financial head start in adult life. With professional fund management and the ability to spread investment risk, they can be a useful way to tap into the long-term potential of the stockmarket and are available from as little as £25 per month or a £250 lump sum.”

“When it comes to charges, some of the oldest, largest and lowest cost funds around can be found in the investment trust industry. Large investment trusts can be a very efficient way of managing money. The independent Boards of Directors are clearly successful in ensuring that economies of scale benefit the shareholders. Excessive charges can compromise returns, and are one of the important factors that investors need to take into account.”


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