UK investment trusts draw growing retail ownership as boards face governance pressure

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UK investment trusts retail shift

Highlights

Retail investors now own 38 per cent of UK investment trusts, outpacing institutional (31 per cent) and wealth manager (28 per cent) holdings, per AIC data.
Platforms like Hargreaves Lansdown, Interactive Investor and AJ Bell boost accessibility, with £1 in every £6 of trust shares now held on their platforms.
Rising retail participation complicates governance as boards face increased activism, lower retail voting turnout, and challenges due to nominee account structures.

Retail ownership gains ground in investment trusts

As reported by Financial Times, retail investors now own 38 per cent of UK investment trusts, compared with 31 per cent for institutional investors and 28 per cent for wealth managers, while adviser platforms hold the remaining 3 per cent. Data cited from the Association of Investment Companies also shows retail holdings have increased over the past four years, even as institutional and wealth manager ownership has fallen.

This makes investment trusts stand out within the broader UK equity market. Figures from the Office for National Statistics show UK-resident individuals owned 11.6 per cent of London Stock Exchange-listed shares at the end of 2024, down from 16.7 per cent at the end of 1998.

In some segments, smaller investors are already the dominant shareholder group. In UK equity income trusts, a category that appeals to investors seeking both growth exposure and above-average yield, retail investors collectively own 59 per cent of the sector.

The trend is being supported by investment platforms such as Hargreaves Lansdown, Interactive Investor and AJ Bell, which have expanded access to trusts for individual investors. The AIC estimates that £1 in every £6 of investment trust shares is now held on platforms operated by those three companies, while demand has also been supported by periods of near-zero interest rates and wide discounts to net asset value.

Interest is also being reinforced by high-profile private company exposure. Baillie Gifford-managed trusts including Scottish Mortgage Trust, Edinburgh Worldwide Investment Trust and Schiehallion Fund are drawing attention because of holdings in companies such as SpaceX and Anthropic, with Anthropic accounting for 7.5 per cent of assets at Baillie Gifford U.S. Growth, 7.3 per cent at Schiehallion Fund and 2.6 per cent at Scottish Mortgage Trust.

Boards confront activism and voting obstacles

The rise in retail ownership is creating a more complicated governance environment for investment trust boards, especially as activist investors such as Saba Capital appear on shareholder registers and repeatedly requisition shareholder meetings. Boards that want to resist such campaigns are under greater pressure to persuade a more fragmented shareholder base to vote in their favour.

Jonathan Simpson-Dent, chair of the Edinburgh Worldwide Investment Trust, said in March, after Saba made a third attempt to remove its board, that turnout among retail investors in shareholder votes is generally lower than among institutional investors. That challenge is intensified by the widespread use of nominee accounts on investment platforms, where many retail shareholders do not automatically receive voting rights.

Even so, the article argues that the growing role of retail investors is supportive for the sector. Because investment trusts do not have to sell assets when investors withdraw money, a strong retail base can help preserve long-term investment strategies at a time when broader interest in investment trusts is weakening.

In our earlier article, we covered the FCA’s Mills Review on the growing use of generative AI by UK retail savers for investment and personal finance questions. We noted regulators’ concern that chatbots can blur the line between regulated advice and general guidance, leaving many consumers unclear about protections and recourse, and highlighted proposed safeguards such as clearer disclaimers and tighter disclosure for sponsored content.

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