Special Report on Investment Trusts (1): Schemes to win back private shareholders: Goodbye to the men in grey suits. Heather Connon finds managers are user-friendly
Wednesday 20 January 1993
And that suited the managers. They were interested in selling their wares to institutions like insurance companies and pension funds; they did not want to be bothered by private shareholders. Now, the men in grey suits have donned flamboyant ties and their conversation is peppered with words like user-friendly, marketing and savings schemes.
The new attitude was spurred by self-interest. Over the last decade, insurance companies and pension funds have dramatically increased their in-house investment teams. They no longer need investment trust managers to handle their money and take investment decisions for them; they want to do it themselves.
The institutions were willing to take any route available to reduce their holdings in investment trusts. Large institutional holdings in several trusts, including Globe - one of the largest - have been sold by their institutional owners, allowing them to be taken over. Trust managers are anxious to stop that happening again, which means they have had to look for a new market for their skills.
In choosing the private investor, trusts are going back to their roots. The first trusts, established more than 120 years ago, were designed as collective investment plans. The aim was to pool the funds of a number of private individuals so that investment could be more widely spread and the risks reduced.
Winning that market back has not been easy. Exact statistics are hard to come by, because of the large number of shareholders who use nominee accounts, but the Association of Investment Trust Companies (AITC) estimates that the proportion of trusts held by individuals has risen from 10 per cent to 35 per cent in the last 10 years.
One of the most successful ways of attracting private shareholders has been through savings schemes. Hitherto, the only way to buy and sell shares in an investment trust was through a stockbroker. That is costly and, unless you have a large amount to invest, it can be difficult to find a stockbroker willing to act for you.
Savings schemes are established by the trust's managers and allow you to invest either a lump sum or regular monthly amounts directly into the trust. In most cases, the charges are low - some are free - and they remove all the complications of share buying.
So far, 34 fund managers offer savings schemes covering 136 trusts. These include Alliance and Second Alliance, Henderson, Fleming and Martin Currie. A record amount - pounds 33.49m - was invested into trusts through savings schemes in the last quarter of 1992, according to AITC statistics just produced. That brought the total invested for the year up to pounds 115.5m, down slightly on the previous year's pounds 119.5m, but a big improvement on the pounds 89,504 invested just eight years previously.
Apart from the ease of buying and selling, regular savings schemes also reduce the risks of investing. Prices on the stock market can be volatile, falling or rising as much as 20 per cent in short periods. If you put in smaller amounts at regular intervals, you take advantage of the low points - by getting more shares for your money - which helps compensate for the times when share prices are high.
The schemes are all different, with minimum monthly payments ranging from pounds 20 for Gartmore and Martin Currie to pounds 100 at Henderson. You should also check the small print for details of charges before deciding where to put your money. For example, John Govett, Fleming and Touche Remnant all charge 1 per cent commission on buying and selling shares in their trusts, while some companies, such as Dunedin and Thornton, charge nothing for either.
Shares in an investment trust can also be put into a Personal Equity Plan, which allows you to escape tax on dividends and capital gains. In last year's budget, the amount which you were allowed to put into trusts through a PEP was doubled to pounds 6,000 a year. There are now more than 24 PEP schemes, giving access to more than 69 trusts. There are still restrictions on the types of trust which can be put into a PEP, although the industry is lobbying hard to have them removed.
As with savings schemes, it is worth considering the charges before you decide to put your money into a PEP. For many people, the charges could outweigh the benefits of the tax-savings.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Jeremy Clarkson 'sees no problem' with his racist language on Top Gear, says BBC
- 2 'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
- 3 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 4 London restaurant 34 creates champagne glass modelled on Kate Moss’ left breast
- 5 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Bin bag full of cats' heads discovered near Manchester's Curry Mile
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
iJobs Money & Business
£550 - £650 per day: Orgtel: Business Analyst - Traded Credit Risk - Investmen...
£55000 per annum: Harrington Starr: A financial software vendor at the forefro...
£600 per day: Harrington Starr: .NET Developer C#, WPF,BLL, MSMQ, SQL, GIT, SQ...
£65000 per annum: Harrington Starr: A financial software vendor at the forefro...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony