Distant interest for long-term gains

'There is no apparent rush to climb back aboard the bandwagon'

I had a delightful request for help and advice from a 19-year-old girl on my radio agony aunt slot last week. Clearly, she was keen to embrace the equity culture, but was nervous about picking individual stocks. I had a brain wave. Try investment trusts, I suggested. There are plenty of generalist trusts around to give a broad spread of risk and - most importantly - they are real shares, quoted on the London Stock Market. The ideal share-starter kit.

I had a delightful request for help and advice from a 19-year-old girl on my radio agony aunt slot last week. Clearly, she was keen to embrace the equity culture, but was nervous about picking individual stocks. I had a brain wave. Try investment trusts, I suggested. There are plenty of generalist trusts around to give a broad spread of risk and - most importantly - they are real shares, quoted on the London Stock Market. The ideal share-starter kit.

I have long been a great supporter of investment trust shares. They are the oldest member of our collective investments heritage. Trouble is they are not necessarily easily understood and have not always been easy to deal in.

In part this reflects the fact that big institutional investors have been major holders of these shares for many years. Investment trusts were, after all, the professional end of the fund management industry, but now the big insurance and pension fund companies have their own investment management resources, the case for holding onto investment trusts has looked flimsier by the year.

Indeed, some investment trusts had a very big shake-out at the beginning of the year when some of the big money managers were dumping stocks to provide cash to invest in high-tech companies about to join the FTSE 100. Even though they are probably now regretting that decision, there is no apparent rush to climb back aboard the bandwagon.

The need to shift ownership from institutions to private investors was recognised by the Association of Investment Trust Companies. An advertising campaign was conceived by AITC director-general, Daniel Godfrey, which is coming up to its first anniversary. Daniel has been back to the companies that supported his move, asking for more money to continue the campaign. By and large they have been happy to oblige, although it is not a universally held view that this approach has worked as well as it should.

It is a fact that discounts have narrowed since the campaign started. The cynical in the investment trust movement would point out that the ability for investment trusts to buy back their own shares has probably contributed as much. Certainly, it has prompted some trusts, like Anglo & Overseas, to undertake a radical restructuring of their business, taking out the institutional share holders and concentrating on private investors.

One thing is for certain, investment trusts are not like unit trusts and require a greater degree of professional skill in accessing the market. There are plenty of brokers out there who will give advice on investment trusts, and sufficient trusts to offer a solution for most investment problems.

If you are not certain who to approach, ring the Association of Investment Trust Companies on 020-7282 5555. But I would warn you about one thing. The tune they used for the TV and Radio advertising campaign may well be played to you while on the telephone to them.

* Brian Tora is Chairman of the Greig Middleton Asset Allocation Committee