Investment trusts no longer necessarily have lower fees than open-ended funds, according to research by wealth manager Tilney Bestinvest. The research compared the ongoing charge figures (OCF) of 47 pairs of funds and trusts managed by the same investment team with similar investment strategies, and found that in 53 per cent of cases the open-ended fund had a lower OCF than the equivalent investment trust.
This is partly because, since 2013, following the retail distribution review (RDR), open-ended funds such as unit trusts and open-ended investment companies (Oeics) have not been able to pay advisers commission for selling them. As a result they have introduced cheaper share classes that do not include a commission payment. These typically have an OCF of less than 1 per cent, in contrast to around 1.6 per cent for older share classes.
However, investors have been slow to recognise the changes in the industry.