The AITC is setting up a committee to examine investment trust liquidity and see what actions boards...
The AITC is setting up a committee to examine investment trust liquidity and see what actions boards can take to reduce their spreads, writes Adam Lewis.
Simon Colson, formerly head of investment trusts at Deutsche, will be in charge of the research, while Daniel Godfrey, chairman of the AITC, will head up the committee. Other members include Rod Birkett, chief executive of investment trusts at JPMorgan Fleming, and Lough Callahan, consultant at Ernst & Young and former head of closed end funds at Mercury.
This follows the withdrawals of brokers Credit Suisse, Merrill Lynch and most recently Deutsche from the sector. Godfrey said the trade body needed to examine the impact this would have on liquidity.
Godfrey said the AITC has been trying to help the industry shift its shareholder base from an institutional to a retail base, and he was not surprised that Deutsche had withdrawn. He said: 'It is a shame Deutsche pulled out but it is not surprising that some big players have gone. Investment trusts are now becoming a more niche product.'
The AITC now estimates that the shareholder base of the entire investment trust industry is 65% institutional and 35% retail, however big generalist trusts such as the F&C Investment Trust and Witan, which have heavily pushed their own promotion, now have more retail holders than institutional.
In 1998 Witan's base was 60% institutional and 40% individual, in June 2001 this changed to 40% institutional and 60% individual, and the target in 2005 is to hit 75% individual and 25% institutional.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till