77% of investment trusts outperform sister funds over ten years
New research points to structural advantages of trusts over funds.
The majority of investment trusts have outperformed “sister” open-ended funds run by the same manager over one, three, five and ten years, according to research released today by the Association of Investment Companies (AIC)1.
Over ten years, 77% of investment trusts outperformed funds with the same manager. Over one, three and five years, investment trusts outperformed their sister funds in 82%, 72% and 53% of cases respectively (see table below).
More than three-quarters of investment trusts have outperformed their sister open-ended funds over ten years.
Nick Britton, Research Director of the Association of Investment Companies (AIC)
Nick Britton, Research Director of the Association of Investment Companies (AIC), said: “More than three-quarters of investment trusts have outperformed their sister open-ended funds over ten years. There’s a number of reasons for this strong long-term performance. Investment trusts have a closed-ended structure, which enables their managers to buy and sell assets at the time of their choosing, not when investors buy or sell. They can invest in less liquid assets, such as smaller companies and even private companies, without worrying about having to sell them to meet redemptions. They can also gear, which adds risk but can enhance long-term returns.
“Investment trusts won’t always outperform open-ended funds, especially in down markets when discounts tend to widen. But over a market cycle, investment trusts’ structural advantages support strong performance.
“We intend to publish this research regularly to track the performance of investment trusts versus their sister funds over time.”
How much did investment trusts outperform?
Over the past ten years, the average investment trust with a sister fund returned an extra £31 per £100 invested compared to the fund. In percentage terms, investment trusts outperformed their sister funds by an average 1.3 percentage points per year.
Over one year, the average investment trust returned an additional £5 per £100 invested compared to its open-ended sister fund, over three years £6, and over five years an additional £3 for every £100 invested. In percentage terms, the outperformance amounted to 4.5, 1.8 and 0.5 percentage points per year for the same time periods (see table below).
The more muted outperformance over five years is influenced by the widening of investment trust discounts over this period. The average investment trust discount2 widened from 4% at the end of March 2021 to 14% at the end of March 2026.
1 year | 3 years | 5 years | 10 years | |
|---|---|---|---|---|
| No. of sister pairs in which investment trust outperformed open-ended fund over the period | 41 out of 50 | 36 out of 50 | 25 out of 47 | 27 out of 35 |
| % of sister pairs in which investment trust outperformed open-ended fund over the period | 82% | 72% | 53% | 77% |
| Average investment trust outperformance (additional £ generated by investment trust per £100 invested in sister fund) | £5 | £6 | £3 | £31 |
| Average investment trust outperformance (% p.a.) | 4.5% | 1.8% | 0.5% | 1.3% |
Source: theaic.co.uk / Morningstar (based on share price total returns to 31/03/26, see notes for details).
Notes to editors
- Source: theaic.co.uk / Morningstar. “Sister funds” are pairs of funds, each pair comprising an investment trust and an open-ended fund (e.g. OEIC or unit trust) with at least one individual named manager in common, and a similar mandate. Performance comparisons are only included for a given period if the funds have shared a manager for the whole period. Average outperformance is the average of the difference in performance between each investment trust and its open-ended sister.
- Source: theaic.co.uk / Morningstar. Average investment trust discount ex 3i and VCTs.
