Whether an investment trust is trading at a discount or premium is an important factor to consider before recommending one to clients. Annabel Brodie-Smith takes a closer look...
The closed-ended structure of investment companies is a defining feature. It can be a huge advantage, as managers can take a long-term view of their portfolio and, unlike open-ended fund managers, do not have to sell assets to meet redemptions. One of the main reasons investment companies can bounce back from a downturn is due to this closed-ended structure. Managers are able to sit it out, holding on to their portfolios and positioning them for recovery. Elsewhere, managers of open-ended vehicles will face redemptions and may well have to sell some of their portfolio to meet them, ...
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