Money managers at some of London’s biggest investment trusts are considering defecting to Switzerland to avoid damaging rules that force them to overstate how much they charge savers.
One trust with a value of more than £630 million is pondering a move to the Swiss stock exchange to avoid the problem, an industry source told The Mail on Sunday.
UK-listed investment trusts are forced by leftover EU rules, implemented by the Financial Conduct Authority, to declare charges far higher than savers pay in reality.
Britain is under no obligation to obey these rules following Brexit. Campaigners say the rules are not even followed in the EU. Another source said some trusts were eyeing the Dutch stock exchange as a destination to sidestep the pitfall.
The revelations come as investment platform AJ Bell showed Britain’s largest investment trusts have suffered huge falls in value since 2022 when the rules came into effect.
Other factors, including high interest rates and a global slowdown, have also pushed down values. Some, such as the popular Scottish Mortgage trust, whose shares have slumped 40 per cent in two years, have also faced questions over governance and the value of some unlisted holdings.
However, campaigners including former Pensions Minister Baroness Altmann argue the controversial EU regulations are worsening the situation and harming savers.
Other players such as FTSE 250 real estate trust Tritax Big Box and RIT Capital, founded by the Rothschild banking dynasty, have fallen 40 and 37 per cent, respectively. AJ Bell said London’s biggest investment trusts, which make up a big chunk of its FTSE 350 index, have lost £16.9 billion in value over the last two years.
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Altmann, with the Lib Dems’ Baroness Bowles and Labour’s Lord Davies of Brixton, is trying to remove trusts from the rules.
Campaigners warn they leave trusts starved of cash and vulnerable to foreign takeovers. Last week US activist investor Elliott Management became Scottish Mortgage’s largest shareholder with a 5 per cent stake worth £607 million. It sparked fears the trust could face the same fate as Alliance, whose boss was ousted after a long campaign by Elliott.
Some of the UK’s largest green trusts also face questions after a long slump in their share prices.
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