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Investment Trust Insider on US trusts


James Carthew: where is a US growth trust when you want it?

One of the strangest things about investment companies is how under-represented the US stock market is within the sector. Dedicated listed North American funds accounted for just 1.6% of the money in investment trusts and investment companies at the end of last year, according to the Association of Investment Companies, compared to 4.7% of open-ended funds (source: Investment Association).

There is an argument that US equity funds might be better structured as open-ended funds than as investment companies but it is not one I subscribe to.

Although for a bog-standard, large company equity fund the two structures can be equivalently useful, for smaller and medium-sized companies, high conviction funds and funds where the manager wants to take a long-term view, the ‘closed-end’ structure of an investment trust works better.

The trouble is that over the short term I do not have much evidence on my side. As I said a couple of weeks ago, most managers of North American investment companies underperformed last year. This was perhaps a little unfair as I was not comparing them to their chosen benchmarks and, re-running the numbers, I found half outperformed and half underperformed.

Top of the group, in terms of relative performance, was…  read more here

Investment Trust Insider on US trusts

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