How I use investment companies: Colin Low FPFS, IMC, FIFP

Chartered Financial Planner, Kingsfleet Wealth.

Colin Low first qualified as a financial adviser in 1994 and has subsequently progressed to achieving the Diploma in Financial Planning in 2002, receiving accreditation as a Chartered Financial Planner at the end of 2010, and completing his Fellowship in 2012.  He completed a Master’s Degree in Financial Planning in 2013. Kingsfleet Wealth has in the region of £30m under management, all on an advisory basis.  Of this, around £250,000 is currently invested in investment trusts – a figure which is growing steadily.

How do you use investment trusts?

We run model portfolios predominately and we carefully select investment trusts for our adventurous portfolio for our clients.  We feel this is a good way to start using investment trusts as they can be slightly higher risk than some open-ended funds and so we are happy to select them for our clients who can cope with this.  We particularly like property investment trusts because they deal with the liquidity issues inside the fund.  We don’t split our asset allocations geographically and so we like global investment trusts many with much longer track records than the open-ended equivalents.  Finally, we like UK invested investment trusts.  They are good quality and again, many have good long-term performance records.

What do you like about investment trusts?

Liquidity: we can always trade illiquid portfolios.

Transparency: the fund manager is not fixed there!  They can be removed and replaced by the board if they underperform.

Simplicity: we use investment trusts as a long-term buy and hold solution for situations like childrens’ savings because they are low cost and offer good long term performance.

What do you dislike about investment trusts?

Comparison data with open-ended and closed-ended funds in one place is not freely available.  There are a couple of data providers offering this but if you don’t buy that particular data feed then it means a lot of searching!  I do, however, think that things have improved over the last eighteen months, and expect this to continue as these sorts of investments become more mainstream.

What could boards or the AIC do more to help advisers understand investment trusts?

Education!  It’s all about education.  Some advisers think investment trusts are niche investments and so only education can change those views.  For me, being able to meet and hear a fund manager speak is important because it is one of our criteria for our investment process.

Are there any tips or thoughts you could pass on to other advisers to help them understand or advise on investment trusts more frequently?

Don’t assume they are difficult!  They are just a little different.  Don’t be afraid to do your research as many have great performance track records.  Invest in them slowly; take your time to understand them and follow the performance of some.  Ensure clients have the appropriate risk appetite for aspects such as gearing, but there are plenty without, so don’t let that put you off.