Should you buy trusts or open-ended funds for income?

Over the last year or so, a lot of commentators have been talking up the advantages of investment trusts, following industry reforms that required advisers to consider them for clients in order to be considered “independent”.

This has had some success, with a number of large, stable investment trusts seeing strong investor demand, and for good reason. Many of these portfolios have outperformed their open-ended rivals on a total return basis year-in and year-out.

Along with a general bullish appetite for equities, this is widely considered to be one of the major reasons why investment trusts are now more expensive than they have been for 40 years.

Stagnant salaries and record-low interest rates have made the hunt for income a major theme since the credit crunch, and as a result, some of the most popular portfolios are dividend-payers in the equity income sector.

But are these portfolios all they are cracked up to be?

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