A half-hour listen.

Mike Wilson is head of investment trust sales at Janus Henderson Investors, and in this wide-ranging interview with Marcus de Silva, explains why he thinks investment trusts are superior, walking through the advantages of features such as the revenue reserve for smoothing income and gearing for generating out-performance. He also discusses why traditionally they haven’t been very popular with advisers.

Investment trusts are steeped in history – the first formed over 150 years ago as the progenitor of the collective investment vehicle during the first wave of globalisation. Mike remarks that while they don’t necessarily “do what they say on the tin”, many strong brands have emerged, such as Scottish Mortgage and City of London.

They come with some defining features that can make them seem complex. In new launches recently the focus has  been broadly on income, and the revenue reserve is discussed first as a feature that greatly enables the manager to smooth the income profile paid out to investors over time. Mike points to numerous trusts with over 50 years of consecutively growing dividends, delivered rain or shine through all manner of market rough and tumbles.

Gearing is next, and Mike explains the facilities available to managers and why this has likely contributed to significant outperformance over the past 10 years, “especially with interest rates so low”.

On boards, he describes a “challenge culture”, which is supportive and friendly for the most part, but also decidedly not-so when needed; indeed painful memories resurface of losing a £350m investment trust to poor manager performance.

To finish, the world of advisers is explored and the reasons why Mike thinks investment trusts have been unpopular. Alongside the implementation of RDR, and with the AIC reporting a rise in their use, he remarks the “playing field seems to have been levelled”.