‘Hugely out of favour’ private equity investment trusts can be a home for those wanting to take their first step into riskier investments, according to Peter Walls, manager of the Unicorn Mastertrust fund.
The Unicorn Mastertrust fund mainly invests in investment trusts and Walls has managed the £117.67mn fund since 2001.
He said while financial advisers can be sceptical of investment vehicles, having a long-term look could pay off.
He told FT Adviser: “When you look at the Magnificent Seven, these are businesses that started off with not a lot of capital. These businesses can grow exponentially.”
Walls also has a big weighting in “out of favour” listed private equity funds.
“[These funds] are hugely out of favour and have discounts but I believe there is a huge opportunity in private markets to generate value.
“Private equity has a dirty name but the investment trusts I invest in have produced out performance by building businesses in a cheaper way.”
When it comes to the investment trust sector, Walls thinks a fear of the unknown puts some financial advisers off putting their clients money into the funds.
He said: “Investment trusts could do with getting a lot more help with getting the message out there.
“Most IFAs prefer to go down the route of using open ended funds because they would have to try and explain discounts and premiums to their clients.”
Walls added: “I would say investment trusts are great for people who want to become hobby investors and learn about equity investing. It is also a great way of getting diversification.”
However, he said overall the British public is not interested in riskier investments and said he was not sure this was a hurdle that could be overcome through education.
tara.o’connor@ft.com
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