The UK’s investment trust sector is shrinking, and it’s raising eyebrows. These closed-end funds, which pool money to invest in assets like stocks or property, have dropped by about 17% in the past three years. According to the Association of Investment Companies, there were 337 trusts in May 2022, but only 279 remained by May 2025. This decline mirrors struggles in the broader UK stock market, where low valuations and economic uncertainty are taking a toll.
Takeovers are a big reason for the drop. This year alone, 10 trusts have received buyout offers, with some sparking bidding wars. For example, Fidelity Japan Trust turned down a bid from AVI Japan Opportunity Trust. These deals often happen because trusts are trading at discounts, making them attractive targets. Investors can sometimes benefit, as buyouts may offer a chance to cash out at a premium.
However, the shrinking sector isn’t great news for everyone. Fewer trusts mean fewer options for investors looking for diversified, professionally managed portfolios. It also reflects a tougher environment for UK equities, with many companies struggling to attract investment. Some experts see opportunity here, as undervalued trusts could be bargains for savvy investors.
Others worry the trend signals deeper issues in the UK market, like low growth or investor confidence.
Despite the challenges, there’s hope. If the UK economy stabilizes or interest rates ease, trusts could regain appeal. For now, investors need to weigh the risks and rewards carefully, as the sector continues to navigate a bumpy road.
World News
UK investment trusts are getting smaller

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