- As well as having plenty of pros, investment trusts also have cons of their own
- Where might other funds work better?
Investment trusts have long been a popular format with Investors' Chronicle readers, and for good reason. Portfolios such as Scottish Mortgage (SMT) have delivered good returns over the long run; trusts offer exposure to illiquid asset classes such as private equity; and they also offer all manner of additional tools, from revenue reserves to gearing. Trusts also enable a "purer" form of active management, including greater use of small-cap allocations, not least because they aren't subject to daily inflows and outflows which managers must incorporate into their strategy.
Having said that, those used to focusing on trusts over other funds should remember this is not always the best option. Trusts can come with plenty of drawbacks, which means open-ended funds do continue to stand out in a number of areas.