We know from their track record that investment trusts (also known as investment companies) are a superb investment vehicle for private and institutional investors alike. Yet the sector is suffering due to a regulatory regime that is leading to a double-counting of their costs, and this in turn is making them appear unduly expensive. Investors are shunning them as a result. This is contributing to discounts having recently been – aside from a moment during the financial crash of 2008-09 – at their widest since 1990, while elevated discount volatility is resulting in further selling pressure.
As we enter 2024, after some lobbying, the government is legislating to address the issue to provide the necessary legislative cover for the Financial Conduct Authority (FCA) to amend its guidance accordingly. Sector stakeholders now have a golden opportunity to solve the problem. Let’s hope they resolve their differences, pull together and convey a common message for the benefit of the sector and investors alike. Much depends on it.