Does the crystal ball predict a year of consolidation for ITs?

Alastair Smith, managing partner of Frostrow Capital, discusses whether investment trust consolidations, mergers and wind ups seen in 2010 will continue this year.

It does not take any psychic or mystical powers to predict 2011 will be a year of consolidations, mergers and wind ups for investment trusts. We saw a little of this activity in 2010, particularly for funds of hedge funds, and we are expecting this activity to continue in 2011. The nice thing about such activity is that it is a sign of a healthy sector. Excluding new launches, specialist trusts and other notable exceptions, it is fair to say that if a trust is around £50m or less in a sector where most trusts are significantly bigger than this it may struggle to attract new investors. Sm...