Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at

Haig Bathgate: the obscure world of investment trust IPOs

by Haig Bathgate on Mar 28, 2014 at 10:39

So, what are my objections?

First, the charges are too high and seem to be rising – I remember fund IPO charges at lower levels and some asset management companies historically covering the launch costs of new issues.

Second, the costs of marketing and selling a fund surely are fixed and not related to the amount of money that I spend on the investment. I would prefer a flat fee that would allow the broker to make a reasonable profit after covering the expense of contacting me and dealing with my application.

Third, I am not quite sure of the service I am getting for this fee. Brokers used to hold investment trust shares on their books so as to create liquidity for a secondary market. Following the financial crisis, they are limited in their ability to offer this facility, but fees seem to have been rising rather than falling as one would expect with a reduction in service.

In summary, I would like a fee that is linked to the service I am receiving and is broken down so I know exactly what I am paying for.

If my objections sound vaguely familiar it’s because they are: a more accountable and easily understandable process is at the heart of the retail distribution review (RDR).

Transparency is key

As an industry, we quite rightly insist that in our dealings with clients we charge a monetary amount that clearly and transparently covers the services we are offering.

This regulatory change was not about making the industry less profitable, but ensuring it is in the best possible position to operate efficiently and serve clients effectively.

There is no point in a clear and transparent process for clients operating alongside a system that is not clear for companies dealing with each other, especially when those companies are the agents of those clients.

Sign in / register to view full article on one page

1 comment so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Mar 28, 2014 at 15:36

He is spot on in all his arguments. The issue expenses should be paid for by the investment manager.. that said lots of issues are getting away and investors (mainly private client stockbrokers / discretionary managers) seem happy to pay the fees... history tells us that no fund stays at a premium.. maybe the infrastructure funds will prove its "different this time".

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home

As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

The Citywire guide to investment trusts

Investment trusts have proved to be a highly effective way to invest in the market. Citywire has interviewed the experts to find out more.

Investing for income in a changing environment

With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet