There are around 3,000 unit trusts and OEICS (Open ended investment companies) in the UK and just 300 investment trusts. Interestingly in spite of there being ten times as many unit trusts and OEICS as investment trusts there are only 100 fund managers!
Whilst investment trusts generally have better long term performance than collective investment schemes, unit trusts and OEICs, there are still reasons why the latter should be included in The Intelligent Wealth Fund.
- Less risky than investment trusts.
- Investor protection is available under the Financial Services Compensation Scheme unlike investment trusts.
- A larger number of funds available.
- Greater choice.
- No equivalent investment trust is available for a sector.
- Easier to buy from platforms and at lower cost.
In a minority of cases collectives do in fact outperform investment trusts. Research has shown that fund management groups with dual funds i.e. an OIEC and an investment trust managed by the same manager in the same sector does not always guarantee outperformance by the investment trust. In fact the ratio of outperformance of investment trusts to collectives is approximately 75% meaning that 25% of unit trusts do in fact outperform their investment trust cousins.
In addition to this there is a far wider fund choice with unit trusts and OEICS than investment trusts if only because there are ten times as many funds than their older counterparts. Many investment trusts are long established and continue to be quite generalist in nature. Some might say old-fashioned but that’s not necessarily a bad thing.
As fund managers it is our job to research and select the unit trusts and OEICS that do outperform investment trusts and to select specialist sectors not served by investment trusts too. Although our bias in managing The Intelligent Wealth Fund portfolio is towards investment trusts and Exchange Traded Funds we do believe that a sprinkling of collectives in our fund will add value to it. Much like a spice adding taste to a meal.
Minerva Money Management intend to invest intelligently on your behalf and always exercise flexibility and judgement rather than being constrained by being pigeonholed into one sector or into one class of asset. After all that’s intelligent investing.
Tony Byrne
Managing Director
Minerva Money Management
