How have investment trusts changed the face of UK finance? What advantages do they provide investors?

Investment trusts are a core feature of the UK financial sector, providing both private investors and corporations with the chance to increase their investment portfolio. Read more: How have investment trusts changed the face of UK finance? What advantages do they provide investors?

How have investment trusts changed the face of UK finance? What advantages do they provide investors?

Investment trusts are a core feature of the UK financial sector, providing both private investors and corporations with the chance to increase their investment portfolio.

Often referred to as investment companies or closed-ended funds, they are similar in design to other types of ‘pooled’ investment options and structures that all allow you to combine your funds with that of other investors to increase their exposure to an extensive range of assets. Investment trusts are publicly listed companies in design that invest in an extensive range of financial assets, shares or other publicly listed companies on behalf of their stakeholders.

Although investment trusts are a common feature of the UK investment sector, not much is known about how they have developed into such an influential option within the UK.

History of Investment Trusts

In comparison to other financial institutions within the UK financial sector, the history of investment trusts is relatively short.

The first formal investment trust, Foreign & Colonial Government Trust, was established in the mid-19th century in London, to grant investors of moderate financial backings access to the stock markets. The stock markets or the financial world in the mid-19th century wasdominated by much larger organisations and investors who had access to significant financial markets. The introduction of investment trusts in the Victorian period revolutionised the access of ‘ordinary’ people into the financial world and provided the British Empire at the time new means to fund schemes across the world.

After the introduction of the first investment trust, the idea and establishment of investment trust took off in the latter part of the 19th century. By the outbreak of war in Europe in 1914, 90 investment trusts had been established – 26 of which are existent today.

Today investment trusts are widely recognised as a UK financial institution and are continuing to grow in popularity at an ever-increasing rate. At the end of 2019, the total assets under management were in the region of £200 billion, an increase of £120 billion in the past 10 years. Although this is a considerable amount, this is dwarfed by the £9.1 trillion worth of assets managed by the UK investment industry.

What has the development and introduction of investments trusts provided ‘ordinary’ investors?

What are the advantages of investing with an investment trust?

Investing with an investment trust has become an attractive option for private investors and businesses looking to expand their investment portfolio and potential for returns.

Protection

Whilst all forms of investing, including investment trusts have their own risk associated. Purchasing funds in an investment trust comes with relative protection due to the common structure of a trust. Investment trusts are structured so that they have an independent board that is responsible for safeguarding investors funds and intentions. This provides investors and their investment from internal issues such as poor performing portfolio managers and restructuring, ensuring the returns from their investment is not compromised.

Cost-effective

This is one of the main advantages and attractive aspects to investing with an investment trust. While you have to pay trading commissions when you complete a transaction (buy or sell), investors avoid fund platform fees that open-ended or traditional investment provider’s charge. Avoiding such regular payments can make a substantial difference to investors wealth over the long term. For this reason, investment trusts are seen to be an extremely cost-effective option whilst providing the potential for long term returns from a single investment.

Long term investments

Whilst at first the following advantage can be interpreted as a limitation, there is a significant financial benefit for the investor and investment trust.

Investment trusts in the design are closed-ended. This means the portfolio manager looking after your investment has a fixed amount of capital to manage. While this means investors can’t suddenly demand their money back based on short-term performance and portfolio managers do not need to worry about holding cash aside for repayments.

A structure such as this minimises the drag for approval or further funds and can benefit/ boost performance in the long term, furthermore, this can provide be the basis for substantial growth in investment opportunities later down the line.

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How have investment trusts changed the face of UK finance? What advantages do they provide investors?

Source : Business Matters More   

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Government’s quarantine plan is idiotic, says Ryanair boss

The government’s plan to quarantine arrivals in the UK is “idiotic” and will be ignored by the travelling public, according to the boss of Ryanair. Read more: Government’s quarantine plan is idiotic, says Ryanair boss

Government’s quarantine plan is idiotic, says Ryanair boss

The government’s plan to quarantine arrivals in the UK is “idiotic” and will be ignored by the travelling public, according to the boss of Ryanair.

Michael O’Leary said that the proposals, due to be implemented by the start of June, were likely to be shunned by many people because they were “hopelessly defective”, doing little to control the spread of coronavirus.

He called instead for the compulsory use of facemasks on all flights, as well as on trains and the London Underground, claiming that this would be a more effective measure to manage the infection.

He spoke out as Ryanair posted its annual results, with the airline warning that it expected overall passenger numbers to almost halve in the current financial year.

The budget carrier reported a 13 per cent increase in profits to €1 billion (£890 million) for the year ending in March on revenue up 10 per cent to €8.4 billion (£7.6 billion). However, it said that it expected to deliver significant losses in the current quarter because of the impact of coronavirus.

Mr O’Leary warned that the impact could be exacerbated by the government’s plan to require all arrivals to self-isolate for 14 days, regardless of their mode of travel. Ministers are expected to abandon efforts today to exempt travellers from France, although hauliers, scientists, medics and border officials will not have to comply.

The plan has infuriated airlines and tour operators, who warn that it will undermine any attempt to resurrect their industries following the lockdown.

Tour operators such as Tui and Jet2 have been planning to restart holidays as soon as mid-June but if Britons are required to self-isolate on their return this is likely to prevent any large-scale bookings. British Airways has already said that it will not resume major flight operations while the quarantine remains in place.

Mr O’Leary said today that the policy was “idiotic and it is un-implementable”. Speaking on BBC Radio 4’s Today programme, he said: “You don’t have enough police in the UK to implement a two-week lockdown. And what’s really worrying is that a two-week lockdown has no medical or scientific basis to it in any event. If you really want to do something that’s effective, wear masks.”

Ryanair has announced plans to implement 40 per cent of flights — 1,000 a day — from the start of July as part of its own recovery. It has said that facemasks will be compulsory on flights and at airports. The airline has also told passengers that it may take their temperature before they fly and refuse to allow those with a fever on board.

Mr O’Leary said that it was likely that the quarantine plan would be dropped within weeks because people would refuse to abide by it.

“The 14-day lockdown has no credibility and I think will be eliminated by the time we get to the end of June anyway,” he said. “As the government puts more meat on the bones of an un-implementable, unmanageable and un-policeable 14-day lockdown, people will simple ignore something that is so hopelessly defective in favour of . . . some effective measures like facemasks. Facemasks are effective; 14-day isolations aren’t. “

In its results, the airline said that it saw an increase in passengers for the full year but that since the start of April it had operated less than 1 per cent of its scheduled flights. It told investors that it had sufficient funds to “weather Covid-19 and emerge stronger when the crisis passes”.

Ryanair is in the midst of consultations over base closures, job cuts of up to 3,000 mainly affecting pilots and cabin crew, and pay cuts as it looks to keep costs low.

Nevertheless the Irish carrier expects to post a loss of more than €200 million (£178 million) for the quarter to the end of June. It expects a smaller loss in the second quarter amid a “substantial decline in traffic and pricing” as a result of the coronavirus groundings.

Ryanair said that it expected passenger numbers for the current year to be “less than 80 million”, reducing its target of 100 million given last week. Its original target had been 154 million.

In a statement, Ryanair said: “Full year 2021 will be difficult for the Ryanair Group as its airlines work hard to return to scheduled flying following the covid-19 crisis. As we look beyond the next year, there will be significant opportunities for Ryanair’s low cost, growth model as competitors shrink, fail or are acquired by government bailed out carriers.”

Read more:
Government’s quarantine plan is idiotic, says Ryanair boss

Source : Business Matters More   

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