In areas such as UK equity, global equity and emerging markets, a greater proportion of trusts have had a manager at the helm for periods of longer than five and 10 years than their open-ended equivalents.
Proportion of funds and trusts with manager tenure exceeding 10yrs
| Name | Fund (%) | Trust (%) |
|---|---|---|
| UK equity income | 32 | 35 |
| UK growth | 27 | 54 |
| Global equity | 52 | 36 |
| Emerging markets | 53 | 67 |
| Asia Pac ex Japan | 32 | 55 |
| Japan | 33 | 67 |
Source: FE Analytics
The most significant difference comes in the area of UK growth; according to FE data, 45 of the 167 funds with a long enough track record in the IMA UK All Companies sector – or 27 per cent – have had the same manager for more than a decade, while in the IT UK Growth sector, seven of the 13 trusts – or 54 per cent – have a manager tenure of more than 10 years.
These seven trusts include The Mercantile IT, which has been headed up by Martin Hudson since 1994.
It is a similar story in the popular Asia Pacific ex Japan region. Our data shows that six of the 11 Asia Pacific ex Japan trusts have a manager tenure of 10 years-plus, while only 13 of 41 Asia funds with a long enough track record pass the test.
There is one glaring exception, however; a greater proportion of funds in the IMA Global and Global Equity Income sectors have been headed up by the same manager for more than 10 years than in the IT Global Growth and Global Growth & Income sectors.
According to FE Analytics, only a third of global equity trusts with a long enough track record have a manager tenure of more than a decade, while 37 of 71 funds in the two IMA sectors – just over half – tick this box.
Proportion of trusts and funds with manager tenure exceeding 5yrs
| Name | Fund (%) | Trust (%) |
|---|---|---|
| UK equity income | 58 | 50 |
| UK growth | 59 | 80 |
| Global equity | 59 | 66 |
| Emerging markets | 79 | 67 |
| Asia Pac ex Japan | 69 | 79 |
| Japan | 67 | 100 |
Source: FE Analytics
There is a similar pattern over five years. Once again, the area of UK growth is a standout example, and there is also a higher proportion of trusts than funds in the areas of global equity, Asia Pacific and Japan. Indeed, all three of the Japanese trusts have been headed up by the same manager for more than five years.
However, once again there were exceptions; this time there was a greater proportion of UK equity income and emerging market funds that retained their manager for more than five years compared with trusts, albeit by a relatively small amount.
Tim Cockerill, head of collectives research at Rowan Dartington, believes investment trust managers are under less pressure than their open-ended counterparts to deliver outperformance in the shorter term, which helps them in the long-run.
"The closed-ended nature means these managers don’t have to contend with mass inflows or redemptions," he explained. "A lot of fund managers have had a lot of problems with this, which takes its toll on performance."
"I think in many ways trusts are looked upon as a more 'grown up' investment. The manager is in the same seat for a long time, is left to their own devices, and not judged too quickly on two or three years of poor performance."
"In speaking to investment trust managers, they always come across as more relaxed and happy to me, which is important – that filters through to the whole team and is only going to be good for performance."
A recent FE Trustnet study revealed that trusts consistently outperform open-ended funds across a number of asset classes.
Among the longest-standing investment trust managers in the AIC universe are Peter Spiller, who has run the Capital Gearing Trust since 1984, and Job Curtis, who has headed up the City of London IT since the start of 1991.
That said, there are a number of industry stalwarts in the open-ended universe: Neil Woodford has been running Invesco Perpetual High Income since 1998, while GAM Global Diversified has had the same manager – Andrew C Green – since 1984.