Disclosure – Non-substantive Research
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour.
In recent years smaller investment trusts have been under pressure. Demand for smaller vehicles has been reduced by two factors: the consolidation in the wealth management industry, and the increasing prevalence of centralized buy lists used by DFMs and advisers. Anecdotally, the lower limit of viable size for many professionals has been rising. £200m is a more realistic cut off point than £100m, and even that is not enough for some. The lower charges and greater liquidity of larger vehicles also makes them more attractive in the current environment.
The COVID-19 pandemic has unleashed forces which seem to be increasing this pressure. In this note we examine the advantages and disadvantages of investing in smaller investment trusts, ask what investors should look for in a small trust and highlight some strategies in the space we think stand out.
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