Word to the wise! Since 2013, the FCA has told Independent Advisers to consider investment companies within client portfolios. What is the best way to

Financial Advisory

21 April 2016

Financial Advisory


The Findings - Tuesday 13 October 2015 - Tylney Hall, Hampshire

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Sponsor introducing: James Burns, Smith & Williamson

Facilitated by: Charo Garzon, Paradox


The investment company sector has grown and continues to grow significantly. It now exists across a wide range of asset classes, managed by high profile managers from well-known groups.

An investment company has a number of characteristics that differentiate it from an open ended fund which we highlight below:

  • Closed ended structure
  • Trade on a stock exchange
  • Independent board of directors
  • Ability to gear
  • Can retain up to 15% of income generation
  • Can go to a discount or premium to net asset value

The Challenge

  • Research

For many IFAs, one of the challenges is having the internal research capabilities to get underneath the bonnet of an investment company.

Allocating client monies to any investment tool requires research and due diligence. Some IFAs feel there is less available information on investment companies than open ended funds.  

Names of investment companies can provide little clue as to what it invests in and by who. For example, Temple Bar is managed by Alistair Mundy at Investec and invests in UK equities. The name, Temple Bar, does not give much away!

  • Accessibility

Once familiar with investment companies, accessibility then becomes crucial.  Some of the largest, most familiar platforms to IFAs cannot facilitate the purchase and sale of investment companies. However, as IFA demand increases for access to investment companies so the platforms are beginning to respond.

The Solution

  • Association of Investment Companies (AIC)


The AIC is a good place to start for those who wish to learn more about investment companies.

They have an informative website and the AIC also hosts regular seminars all over the country for IFAs.

  • Platforms

For those IFAs investing client monies themselves, picking the correct platform is a crucial step to being able to access investment companies.

  • Outsourcing

For some IFAs, one option available to them is outsourcing to an investment manager.