Industry body The Association of Investment Companies (AIC) has challenged City brokers such as AJ Bell and Hargreaves Lansdown on their “disappointing” blacklisting of certain investment trusts that fail so-called 'fair-value’ tests.
AJ Bell last week confirmed that it had blocked retail investors from buying heavily discounted trusts including Chrysalis Investments and Bluefield Solar Income on grounds that they fail to offer good value to retail investors.
In comments published by Citywire, AIC’s communications director Annabel Brodie-Smith said: “It’s hard to see how restricting consumer choice like this could be helpful for consumers… Surely, it’s up to investors to do their own research and then decide which companies they want to invest in.”
British investment trusts small and large command steep discounts at the moment due to decreasing investor demand.
Though consumer duty regulation requires brokerages to safeguard retail investors against making poor purchases, the AIC argues that they are being prevented from buying cheap shares in closed-ended funds whose discounts could potentially decrease over time.
Users of these platforms are still able to phone in dealing instructions.
No such restrictions have been placed on heavily discounted AIM-listed company stocks, a fact that was flagged by a Citywire commentator.
“You can buy a piece of absolute dross on AIM but you can’t buy Bluefield Solar with its government-backed stable revenues and healthy income cover? Utter nonsense," they said.