Investment trusts, which have existed since 1868, are currently seeing an improving outlook following a challenging period. The past few years were difficult for the sector, with discounts on trusts reportedly soaring. This led to pressure from both opportunistic activists and disgruntled shareholders.
MoneyWeek contributing editor Cris Sholto Heaton noted that while external factors played a role, the sector was also due for a shake-up, with some boards described as complacent. There was also a clear need for consolidation and a critical issue with failing to attract new investors.
Investment trusts are characterised by their 'permanent capital', which allows managers to adopt a longer-term perspective when building portfolios. This structure is considered particularly valuable for investments in sectors such as property, infrastructure, and private equity, where assets cannot be sold quickly. It is also seen as beneficial for listed investments like smaller companies, which can experience high volatility.