AIC calls for clearer disclosure of gearing on investment trusts

The Association of Investment Companies (AIC) has called for changes when it comes to reporting gearing of investment trusts.

The AIC is recommending a number of changes to how gearing is disclosed to produce more consistent results.

The changes include disclosing a consistently calculated gearing percentage, rather than a ratio, as well as setting out a minimum and maximum range of gearing that the investment trust manager can work within.

The AIC also recommends showing the historic gearing parameters over the past five years.

Ian Sayers (pictured), director general of the AIC, said that advisers now seemed more comfortable with the idea of gearing, but that they needed a clear picture of each company’s approach to ensure it is appropriate for their clients’ risk profile.

‘Advisers have told us that they want to know how highly geared a company is today, how gearing has been managed in the past, and where it may go to in the future,’ he said. ‘We believe these recommendations will help our members provide this information to advisers and investors in a more consistent and helpful way.’