About 30% of existing investment trusts should be put out of existence to help boost liquidity in the sector, suggests a survey of 328 investment trust directors published today by JPMorgan Fleming.
On average, the directors expect the current 360 funds to be culled to about 250 over the next 10 years JPMF says.
Most also want greater retail investor involvement in the sector: three-quarters of those questioned say increasing the retail shareholder base improves liquidity.
Entering share buy-backs or putting shares in treasury are seen as other options to boost liquidity, although support for either way is split down the middle, the survey suggests.
Performance-related fees are seen as the way forward for management of investment trusts, and as a way to boost retail investment in such funds.
About eight in 10 directors surveyed believe the sector will come under some form of formal regulation to strengthen corporate governance.
Annabel Brodie-Smith, communications director Association of Investment Trust Companies, says the findings on consolidation reflect previous comments on shareholder interests expressed by the association.
"The investment trust industry is all about delivering returns to shareholders," she says, which is why talk of consolidation should not come a complete surprise.
The AITC has already asked boards to look at consolidation as an option, linked to questions about individual funds' markets, performances and shareholder communications, she adds.
What is different about this survey's findings is the specific reference to the numbers of trusts that those in the industry expect to see consolidate, she says.IFAonline
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