Around 40 investment trust ISA schemes are on the market this year. These schemes are run by investment management houses linked to the investment trust portfolios they run, to encourage people to invest their ISA allowance into these trusts.
The investment houses basically provide the ISA wrapper, usually at a minimal cost, and allow investors to hold their trust or trusts within the tax free environment.

The variety which investment trusts offer in general is the main reason many investors are interested in these vehicles for their ISA according to the managing director of SVM, Colin McLean. ‘You get this wide range of trusts in the investment trust world,’ McLean explains, ‘and some of the specialist ones are very interesting to hold longer term. You can find things like emerging market trusts, and, as a result, People are keen on the range they can access.’

Investment trusts also make good ISA investments for the same reasons that they make good investments in general, says McLean. ‘Often these trusts have more flexibility than open ended investment companies (OEICs) to gear up and catch more of the upside of markets, or to go into some slightly more esoteric areas. So people who fundamentally like these things about investment trusts and feel they are a good investment longer term will be interested in them for ISAs.’

McLean holds his own ISAs within the SVM investment trust ISA scheme, and points out that savers can select a combination of the house’s trusts.  ‘People also like the fact that there is more profile attached to the managers and the board and the level of reporting and explanation is higher. For people who like to look at reports they get more information than they do for open ended funds.’

Another factor which attracts ISA investors to investment trust ISA schemes is the lower management cost of investment trusts. Most schemes have no initial or annual charge and purchase costs of £2.50 to £15 and/or 0.2 per cent to 1 per cent.

If the investment house levies a charge for the wrapper, it is generally very low. Of course it is possible to use investment trusts for ISA savings through a self select ISA. As investment trusts are listed, you can buy the wrapper from an online broker and then buy and sell investment trusts as you would normal shares.