View more on these topics

RDR could have mixed impact on investment trusts, says Numis

Numis Securities has warned the implementation of the retail distribution review could have a more mixed impact on the investment trust sector than some commentators suggest.

The RDR, due to come into effect at the end of 2012, is predicted to boost investment companies by allowing them an equal footing with other fund structures in the retail market.

Numis say this consolidation could impact on the demand from core buyers of investment companies.

Under the RDR, advisers will be asked to agree their own charges directly with the customers, rather than automatically having a deduction from the fund in the form of commission set up by providers.

As most investment trust providers do not offer trail commission, investment trusts have hitherto received little attention from financial advisers who accept commission.

However, Numis says advisers are unlikely to start recommending investment companies. The perceived complexity of the structure will remain a strong deterrent, it says.

Advisers may find that investment trusts are only liquid enough for their needs if the trusts embark on new share issues, Numis says.

The main benefits of RDR are likely to be indirect, such as through the transfer of portfolio management responsibilities from advisers to asset managers, says Numis.

Recommended

Just Retirement reports 11% sales boost

Just Retirement has reported a £49m increase in sales for the six months to December 31, 2010 following a 20 per cent jump in equity release business. Total group sales increased from £446.1m in the second half of 2009 to £495.1m in the corresponding period last year, unaudited figures show. Sales of equity release mortgage […]

3

PPI makes up half of all FOS complaints

Half of all the complaints to the Financial Ombudsman Services in the last three months of 2010 related to payment protection insurance. According to figures published by FOS, complaints about PPI made up 50 per cent of all those received by the ombudsman, up from 45 per cent in the previous three months. FOS received […]

2

EU to enforce tough “single rulebook” on banks

The head of the European Union’s new banking authority will look to prevent regulatory competition between member countries and strictly enforce a “single rule book” on banks. In an interview with today’s Financial Times, European Banking Authority chairman Andrea Enria, who will be based in London, says he will be taking a tough line to […]

Happy while you work

Well we’ve had scorching weather (yes even up here in Scotland!) and now the Euros 2016 are on – you can’t blame people for wishing life was just one big holiday.  With all these distractions it sometimes feels like work just gets in the way of having a good time! But sunny day skivers are […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. . Again we have an assumption and the law of unintended consequences interfering in the free market.
    I am an IFA, I have advised clients on Investment trusts for years, I do understand them, and have charged 3% for placing deals and 1% on the disposal. Playing the discount game is a very good way of beating the market over time.
    The split capital market was all but destroyed by the FSA and spotty faced journalists back in 2002, from which recovery was slow (due to bad press) and the regulator setting compensation on a certain date, when ultimately many IT’s recovered fully and made large profits for those brave enough to buy in to the discounts.
    RDR will be a disaster and those who do understand the IT market will be retired and long gone before a new generation have the experience and knowledge to deal confidently or manage to get Indemnity Insurance to enable them to deal in the IT market.

Leave a comment