"The AIC has struggled against the fact that IFAs have not plunged whole-heartedly into investment trusts," he said. "Following the RDR I think advisers will be more likely to take them up, especially after the barrier of remuneration fees is gone."
Investment trusts offer a cheap means to access strong dividends, he believes, and his view is backed by a recent study from the Association of Investment Companies (AIC).
"There are some very good investment trusts out there providing excellent dividends, but dividends are not the only thing. Investment trusts also have lower costs than their unit trust counterparts," added Katz.
Data from the AIC reveals a number of trusts have maintained steady dividends for many years, including 16 that have managed to raise dividends every year for the last two decades.
Of these trusts, seven have managed to do so for more than 40 years, including big retail names like Alliance Trust, Bankers Investment Trust, Caledonia Investments and Foreign & Colonial Investment Trust.
Dividends are most consistently recorded in the UK Growth and Income sector, which saw 28 per cent of its companies raise dividends over 20 years and an impressive 67 per cent achieve this over 10 years.
In the Global Growth sector 26 per cent of companies have raised dividends over 20 years while 29 per cent have done so over 10 years.
"Dividends have always been an important component of equity investing, and are likely to become increasingly so in the current inflationary environment," said Annabel Brodie-Smith (pictured right), communications director at the AIC. "The investment company sector has an unrivalled track record when it comes to raising or maintaining dividends."
"This is because they can retain up to 15 per cent of the income they receive each year and transfer this to their reserves. This allows investment companies to build up their revenue reserves during the good years, which allows them to pay dividends in difficult years."
"Known as ‘smoothing’ dividends, this is one of the defining characteristics of the sector."
Performance of trusts over 3-yrs
Source: Financial Express Analytics
According to Financial Express data, over a period of three years City of London Trust was the best performing of the three companies with the longest history of dividend growth.
It returned 25.58 per cent compared with Alliance Trust, which returned 15.9 per cent, and Bankers Investment Trust, which returned 15.5 per cent over the period.
Jonathan Wallis, head of research at Allenbridge Investment Consultants, said there was still much work to convince investors that investment trusts were worth a punt.
"Our retail customers tend to go down the unit trust route," said Wallis. "The main disadvantage of investment trusts is that they can trade at a discount or a premium. This adds an extra element of risk for investors."
"Another difficulty is that elements such as gearing can make trusts look more complicated, which tends to put off investors."