BlackRock considering new investment trust launches

BlackRock plans to bolster its investment trust business to benefit from the retail distribution review (RDR).

Tony Stenning
Tony Stenning

It is widely anticipated the reduction in commission-based products post-RDR will encourage advisers to look at investment trusts, which they have often ignored as the trusts do not generate commission.

Research by the Association of Investment Companies (AIC) earlier this month revealed 42% of financial advisers expect to increase their exposure to investment trusts over the next three years.

“For too long investment trusts have been looked at as pariahs and dinosaurs,” says Tony Stenning, the head of UK retail at BlackRock.

“We are not saying the RDR is a panacea for investment trusts, but we see people increasingly using investment trusts as solutions for clients when there is no commission bias in the system from January.”

Stenning says certain markets – such as the frontier markets and new energy, where the group already has investment trusts – do not lend themselves to an open-ended fund structure.

“We see investment trusts as a growth area of business and are actively considering new trusts,” he adds.

However, Stenning warns there is still an accessibility problem with investment trusts.

“We need to make sure the platforms have access to the stockmarket. Although for illiquid investment trusts, being listed on a platform could create problems, the larger investment trusts will benefit as they will be accessible by a broader church of investors,” he says.

Meanwhile, BlackRock is reopening its European Diversified Equity Absolute Return fund on 2nd May. The fund, which was launched in August 2010 and is run alongside two private funds, was soft closed in April last year.

A spokesperson for BlackRock says it has no plans to cap the new Americas Diversified Equity Absolute Return fund, which was launched in February.