INVESTMENT TRUST POLICY
Mr. R. B. H. Ottley, in his thoughtful address to the share.. holders of General Consolidated Investment Trust last Friday, raised two points which all those concerned with running both orthodox management investment trusts and unit trusts will consider very carefully. How would one plan one's invest- ment policy if one had the opportunity to shape afresh the portfolio of a management trust? And how far are the unit trusts serious competitors of the management trusts?
To the first question Mr. Ottley answers briefly : " Keep the investments within the British Empire." If he had the oppor- tunity of adopting a new policy for General Consolidated Investment Trust he would sell the remaining foreign invest- ments. He realises that geographical distribution itself is no longer any criterion of strength and that wars and rumours of wars, currency restrictions and Government interventions have affected too many of the countries in which formerly one was glad to invest. Naturally, Mr. Ottley had to add that in present market conditions it is not practicable to carry out such a change as he has in mind, because in present market conditions one can neither buy nor sell large blocks of stock without dis- proportionately affecting prices.
Mr. Ottley will command general approval for his views on investment policy, but his observations on the relationship between management trusts and unit trusts are likely to excite controversy. Observing, on the one hand, a very narrow market in the securities of the management trusts and on the other the growth of the unit trust movement from almost nothing to about £9o,000,000 in the course of a few years, he draws the conclusion that in the absence of the unit trusts a large proportion of these funds would have been diverted towards the securities of the older type of managed or flexible investment trust companies.
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