Aberdeen, one of the largest managers** of investment trusts globally, responded to the FCA’s Consultation Paper 24/30 – A new product information framework for Consumer Composite Investments.
While Aberdeen’s formal response covers the CCI regime broadly, and there are many aspects of the broader consultation in which Aberdeen is supportive, this press release relates entirely to the treatment of UK Listed Closed Ended Investment Companies [investment trusts].
Aberdeen welcome the FCA’s efforts to resolve historical disclosure requirement issues, which have plagued the UK listed closed end fund sector in recent years.
This latest consultation is likely the last chance to ensure investors in UK Listed Closed Ended Investment Companies [investment trusts] are given relevant and accessible information on charges, without the ‘double counting’ of costs which has been so damaging over the past few years.
It is Aberdeen’s strong recommendation that investment trusts should be excluded from the Consumer Composite Investments (‘CCI’) rules, or ring fenced in the CCI regime. Aberdeen believes there should be no additional rules or disclosure obligations over the existing market rules and relevant industry-driven standards such as the Statement of Operating Expenses (‘SOE’) which has been developed by participants from across the industry, and which Aberdeen was the first to roll out.
Aberdeenstrongly objectsto any form of aggregation of costs for investment trusts to provide misrepresented information to the consumer. The alternative Aberdeen proposal is to disclose relevant costs and charges with appropriate context.
Christian Pittard, Head of Investment trusts and Managing Director of Corporate Finance, Aberdeen, says:
“This is about providing investors with more information and improved disclosure, in the spirit of meaningful transparency. Investors deserve nothing less. The simple fact is that the costs of managing open and closed ended structures are fundamentally different and not directly comparable. Operating costs are not a deduction from investors value in an investment trust, as they are already incorporated in the share price.
“Much has been said about the existential crisis facing investment trusts, which have delivered capital at scale into productive assets, so key to the UK’s growth agenda, for generations. The cost disclosure rules have been the single biggest barrier to competitiveness, both amongst listed peers and internationally. Inclusion in the CCI rules would perpetuate this further.”
Christian Pittard continues: “It is investment trust shareholders who have paid the real price for the confusion. Discounts remain far too wide, choice shrinks as investment trusts consolidate, and confusion around charges prevails, eroding confidence and compromising investor outcomes. This is a sector that has played a key role in powering the portfolios of retail investors over the long-term.”
Aberdeen’s submission comes in addition to Aberdeen’s support for the Industry Campaign Group and its work with the AIC.
