The UK's investment trust market has experienced a revival in recent months, with net inflows reaching £1.5 billion in the first quarter of 2023, according to data from the Investment Association. This growth is a significant increase from the £500 million seen in the same period last year, and is expected to continue driven by the appeal of their tax-efficient structure and flexibility.
Investment trusts are a type of closed-end fund that allows investors to pool their money to invest in a diversified portfolio of assets. They offer a number of benefits, including tax efficiency, flexibility, and the ability to invest in a range of assets, including shares, bonds, and property.
The surge in popularity of investment trusts is also reflected in the performance of the FTSE 250 index, which has risen by 10% in the past year, outpacing the FTSE 100 index. This growth is expected to continue, driven by the increasing demand for investment trusts and the improving economic outlook.
For UK savers, the revival of investment trusts is good news. With interest rates on savings accounts remaining low, investment trusts offer a more attractive option for those looking to grow their wealth. However, it's essential to note that investing in investment trusts carries risks, and UK savers should seek advice from a qualified financial adviser before making any decisions.
The Bank of England's monetary policy committee has also taken note of the growth in investment trusts, with Governor Andrew Bailey commenting on the potential benefits of this type of investment for savers. 'Investment trusts can offer a more attractive option for savers, particularly in a low-interest rate environment,' he said.