Wide discounts may prove to be attractive

When looking at funds of funds the choice is not just between fettered or unfettered but whether to go for a vehicle that invests in open or closed-end funds. The attraction of a fund of investment trusts is that the underlying holdings can often be bought at a discount to NAV and are often geared. The downside is that discounts can always widen further and being geared in a falling market has a big negative impact on returns. Nick Greenwood, head of investment trusts at Iimia, said the scope for returns in funds of investment trusts is much higher than for funds of unit trusts. ...