Dampier: Why investment trusts have no chance of displacing funds


Dampier is the funds ‘expert’ at Hargreaves Lansdown ho if I’m not wrong make a lot of money from the commission in trading funds.

Hargreaves are Johnny come latelys to investment trusts so perhaps this is his defence against a pretty indefensible position IMHO.

His basic argument is that the only way mainstream trusts will cater for a surge in demand is if they adopt open-ended characteristics. Things like discount control mechanisms and even removing gearing, which to quote Dampier would “defeat the object” of investing in them in the first place.



Utter nonsense. The reason why there is so much more money in open ended funds is because of the historical commission situation whereby ITs didn’t pay commission to financial advisers and open ended funds did.

Because of that the fund management groups didn’t bother launching many ITs.

Though you also have to add the fund management groups don’t like the fact that ITs have an independent Board that they cant control and can do nasty things like push through lower fees, change the manger or worse still sack the fund management group.

It’s no more difficult to launch an open ended or closed ended funds, they both ended to be either seeded by the fund manager or get initial investors on board.

Dampier I believe is taking this line of argument to explain his firms past almost complete denial of the IT sector.