Asset Manager M&A May Also Apply to Investment Trusts: Jefferies
Drivers of recent fund manager M&A are also applicable to investment trusts, Jefferies says in note.
- Rise of ETFs, fee pressure and need to broaden distribution should provide added momentum for boards to consider mergers
- Says investors in sector would be “better served” if mergers between trusts were used to address these issues
- Especially if mergers can create large/liquid ‘mega-trusts,’ funds that would be big enough to be included in the FTSE 100
- Adds that the investment trust sector is over-fragmented, has been left behind by growth of its investor base post-RDR
- Larger trusts may be better positioned to address industry fee pressure, larger pools of capital means better negotiating positions with managers on fees, and fixed costs are spread
- Scottish Mortgage joining the FTSE 100 highlights that scale doesn’t have to come at the expense of performance