In an article on the back of today’s FT John Authers draws attention to the excellent performance being generated by closed end funds versus their open-ended peers. We at QD think it is good to see the closed-end fund industry getting the recognition it deserves but unfortunately the article is also peppered with phrases such as investment trusts being a “small and apparently outdated section of the investment universe”, “Nobody today would design a product like investment trusts” and “Products of the Victorian age…”. This prejudice against closed-end funds is rooted in events twenty odd years ago when the big generalist trusts had fallen out of favour with the institutional investors that often made up the majority of the shareholder base. The industry has changed beyond recognition since then, notably since investment trusts were permitted to buy-back shares. Forays into areas such as funds of hedge funds and highly leveraged property funds are a blot on the industry’s copy book but this “Victorian” sector is actually highly innovative and adaptable. It also accounted for a substantial proportion of all money raised on the London Stock Exchange last year (and for some years before that). Far from being “less useful for wealth managers who charge for shuffling clients’ assets between a range of funds”, the sector is hoovering up money from them. Wealth managers recognise, post RDR, that closed end funds with their low charges, independent boards who are not afraid to sack underperforming managers, a range of tools to reduce the volatility of their discounts and, of course, superior investment performance, are a sensible home for their clients’ money.