AIC to release liquidity report on investment trusts

The Association of Investment Companies (AIC) is planning to publish a report on the question of liquidity when it comes to dealing with investment trusts.

AIC director general Ian Sayers (pictured) said the report, which will be released in December, will be targeted at boards of investment trusts but would also help the advisory market.

‘It might help to reassure advisers,’ he said. ‘Many ask me if there is a liquidity problem. I ask them how much are they buying, and they normally say the ISA limit of £10,000. The reason they fear there’s a liquidity problem is that they have heard of multi-managers putting £5-10 million into an investment trust [and having problems moving it around].'

Sayers pointed to Brewin Dolphin, which has just reached the £3 billion mark in investment trusts, as an example of a larger purchaser.

‘Research shows that if you’re dealing with small amounts of money as an advisers, then liquidity is not likely to be an issue, it’s only with large amounts of money that it might become a problem,’ he said.

Sayers added that the report will look at how boards can improve their liquidity, including marketing their product and unique proposition to bolster demand. He said improved marketing could lead to better awareness and tightening of discounts.