Nick Greenwood’s 40-year career in the investment trust industry had a chancy start. In the early 1990s, investment trusts were having a moment. An asset-hungry sales director at Christos saw the potential for a fund of investment trusts. Greenwood, then a stockbroker for the group, was put in charge, and the rest is history.

Greenwood ran the Christos portfolio until 2001, when he moved to Miton Asset Management (now Premier Miton after a merger in 2019). He spent almost 23 years with the group, running the MIGO Opportunities and Worldwide Opportunities investment trusts. He remains as a consultant to the trust, which moved to the AVI stable in 2025.

He built a reputation for probing untapped corners of the investment trust industry, patiently waiting for value to be realised. This, he says, remains one of the best things about investing in the sector: “The sector has been relatively inefficient. You don’t have to be a rocket scientist to spot things that are clearly at the wrong price and to make some fantastic returns. There’s been quite a few things over the years that fit that brief, trusts such as Invesco Japan Discovery, Gartmore Irish, Radio Trust or even Taverners.”

Taverners was a great example of both his contrarianism and his ability to spot value. It held a portfolio of breweries and pubs. In the giddy heights of the TMT bubble, the pub sector fell significantly out of favour. Taveners could find no interest from investors and its discount widened to 25%. “If my memory serves me right, the revenue of Lastminute.com was less than Greene King’s smallest pub. When the world turned, everyone wanted to be in the old school breweries. We got a huge return on it as the TMT bubble blew up and everyone went back into the old value stocks.” It also afforded him a couple of enjoyable research trips.

This, he says, has been a persistent characteristic of the investment trust industry. “There’s been opportunities to make fantastic profits and at relatively low risk, because given the discount, what could go wrong? The cash flow coming from those upright businesses was pretty significant. There were some decent returns with very low risks,” he adds. “I’m sure that that sort of environment will come back again.”

However, he does not underestimate the current challenges facing the sector. The most important is to find new buyers. During his career, he has seen the evolution of investment trusts from a primarily institutional product to a wealth manager product, but now they need to move on again.

“When I started, F&C, M&G and JP Morgan all had stakes in investment trusts. Over the years, they departed the share registers, so the wealth managers (or private client stock brokers) were the obvious hope for investment trusts. The problem now is that these organisations have consolidated from 100 or so wealth managers into four or five mega chains.”

“Rathbones merging with Investec, for example, created a £100 bn business. If you want to put 1% of that into an investment trust, you need a billion quid. You can’t even do that in Scottish Mortgage. So, the sector has to move on again.” While smaller wealth managers breaking off from the mega chains will stay with investment trusts in an attempt to differentiate themselves, he believes the self-directed investor is the obvious choice. Nevertheless, there are questions over how to target this group, and whether they are large enough to support the sector in its current form.

There are also regulatory challenges, particularly in the drive for standardisation. Greenwood says investment trusts are a peculiarly British phenomenon, and this presents problems. For investment management companies, it means that if they want to replicate their business model in other countries, they can’t do it with investment trusts in the same way they can with open-ended funds.

It also means that regulatory understanding is poor. The cost disclosure debacle shows that there remains a lack of investment expertise within the major regulators. Greenwood says: “It’s really, really tough. However, the investment trust sector has faced really tough situations in the past and regenerated.”

Activism could galvanise the sector. Boaz Weinstein of Saba Capital is still on the scene despite some high-profile defeats by shareholders. Greenwood says there is nothing inherently wrong with buying shares of investment trusts and aiming to force an exit closer to NAV. He also believes the sector encouraged the problem by allowing discounts to drift out.

However, he disputes the characterisation of this activism as an altruistic move designed to help beleaguered mom and pop shareholders: “Don’t pretend you are campaigning for the rights of other investors if you are just making a short term turn out of the discounts.” He also mistrusts the attempts to take over the management contracts. Nevertheless, it does appear to have pushed some investment trusts to act, improve corporate governance, begin buybacks and gee up investment performance.

Long-term asset funds are another risk for the sector – but not because they are a superior structure. Greenwood is clear that investment trusts have the edge. “The protection of inflows and outflows means investment trusts are superior vehicles for active management or investing in less liquid assets, such as property or private equity.”

His view is that LTAFs are a risk to investment trusts because regulators have decided they are the direction of travel, “and it’s always dangerous if the regulators can force change.” Greenwood says the main difference between LTAFs and investment trusts appears to be the six month windows where investors can redeem. He points out that open-ended property funds were in redemption mode for long periods too – “all you’re doing is postponing the carnage by a few months.”

“If a sector goes out of favour, it tends to be for years, not months. Therefore, you just defer a problem and don’t actually change anything. With an investment trust, if you take a view, you can actually get a price. You can actually sell out of your investment rather than getting locked in.”

Greenwood has now passed over day to day management of his funds to a new team at AVI, but is maintaining a consultancy role at the group. His expertise will be sorely needed at another critical juncture for the investment trust industry.