The Open And Closed Case
Investors tend to overlook investment trusts in favour of promotion-friendly open-ended investment funds. However, they are not always the better option.
The worlds of investment trusts and open-ended investment funds are often portrayed as being at opposite ends of the investment spectrum. Investment trusts, which first appeared at the end of the 19th century, tend to be depicted as rather old-fashioned in their approach. Unit trusts, and the open-ended investment companies (Oeics) that many of these have become, which were first introduced in the UK in the 1930s, seem to have a more up-to-date image. As a result, many private investors overlook investment trusts.
Although open-ended funds have tended to dominate the investment fund sphere and their managers and performance figures have gained more attention than their investment trust equivalents, a surprising number of investment managers use both. Given a choice between the two, there are good reasons why investors would often be better off with an investment trust.
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