Numis Securities expects the number of investment trusts to shrink this year as disgruntled investors and hedge funds force smaller vehicles to close.
The broker says over one third of listed fund have market caps under £50m, while almost 60% are under £100m. Their size means these companies suffer from high total expense ratios, as well as little liquidity, no research coverage and wide discounts. “In our view, many of the funds launched in the bull market are no longer relevant to investors, including the CDO funds and many of the emerging market property vehicles listed on AIM,” says Numis. “In addition, many of the listed funds of hedge funds or funds of private equity funds are off the radar of most investors as they are too sm...
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