Gearing is also something of a red herring, since not all ITs gear and meanwhile Oeics can borrow if the manager so wishes, within certain parameters. The gearing is performed by an experienced professional who possesses significant skills in deciding when to gear.
Many ITs have delivered excess performance over their Oeic equivalents over the years, and this is their real advantage.
Perhaps most importantly, more income can be generated from an IT than from the equivalent Oeic; any discount means more securities (and the dividends they generate) are bought for a lower price.
Investors who sensibly follow a ‘buy low and sell high’ approach can benefit significantly through that same discount/premium effect – if you are a buyer of emerging markets now, you can buy those securities via an IT at a 15 per cent discount to their actual (and depressed) value.
The emphasis of retail investing has changed in the past couple of years, and the well-worn pros and cons of ITs need to be reappraised by advisers and their customers. Platforms do not serve their customers well if they continue to deny them access.
Bill Vasilieff is chief executive of Novia
