Call to give investment trusts more support
Policy makers should provide more support for Scottish investment companies – often referred to as investment trusts – which are a “cornerstone of Scottish financial services”, according to the sector’s trade body.
The Association of Investment Companies (AIC) is making the case for tax and regulatory reforms to investment companies, which benefit Scotland and its investors.
In a new briefing note to Scottish MPs and MSPs, the AIC set out the advantages offered by closed-ended investment companies, that “have deep roots in Scotland’s financial landscape”.
The first, the Scottish American Investment Trust (now Dunedin Income Growth), was launched in Dundee in 1873. Others soon followed and continue to serve investors today. The AIC says: “These early pioneers not only established enduring institutions but also laid the groundwork for Scotland’s lasting reputation as a centre of investment expertise and innovation.”
The AIC adds that Scottish investment firms account for more than half of all Scottish listed companies and represent roughly one-fifth of their total market capitalisation.
It says: “Incorporated in Scotland, these companies are listed on the London Stock Exchange and invest across global markets. Their portfolios are managed by asset managers including Scottish stalwarts such as Baillie Gifford, Aberforth Partners, and Aberdeen Investments.
“These firms have strong reputations for their expertise and long-term outlook, attracting international capital and reinforcing Scotland’s standing as a hub for asset management. In doing so, they not only deliver for investors but also contribute to employment, innovation and the wider Scottish economy.”
According to the AIC note, investment companies “offer the potential for superior returns because of their long-term perspective and exposure to a wide range of assets. They also help diversify risk.”
It states: “The industry continues to provide investors with access to diverse opportunities while reinforcing Scotland’s position as an international centre of financial expertise.”
The AIC says that in the past 15 years, Scottish investment companies have grown in significance. Today, there are 14 investment companies in the FTSE 350, 12 in the FTSE 250, and two in the FTSE 100. The average company size has also grown, with average assets rising from £424 million in 2010 to £1.3 billion in 2025. Assets under management (AUM) have risen from £17bn in 2010 to £41bn in 2025.
The AIC believes policy makers could do more to support investment companies with tax and regulatory reforms to help maintain and expand the sector.Key reforms the AIC is calling for include:
◆ Ending the practice of charging investors 0.5 per cent of the value of the shares bought when they buy Scottish company shares. The same tax is not levied on non-UK shares.
◆ Increasing incentives to buy listed shares via individual savings account (ISA) reform. This would include reducing the amount of cash that can be saved and ending stamp duty on shares bought via ISAs (if a full removal of this charge is not introduced by the government).
◆ Using the National Wealth Fund to sponsor investment companies with a remit to invest in Scottish businesses and infrastructure.
◆ Allowing venture capital trusts to invest in a wider range of small businesses seeking growth capital.
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