"The net asset value will usually differ from the share price, with a trust trading at either a discount or a premium to the net asset value.
"It is important for clients to understand the discount and premium but other than that, the net asset value is not particularly important. But the FCA has chosen to focus on that number.
"This means potential investors are seeing internal costs without any context, and it looks as though they are paying twice.”
William McLeod, managing director at Gravis Capital - which is both a manager of an investment trust and, via multi-manager funds, an investor in investment trusts - said the regulation currently risks misleading clients.
His view is that the Mifid regulations outline how cost disclosure rules should be applied and refers to the rules applying to financial “products”, but in his view, an investment trust, as a listed company on the stock exchange, is not a financial product.
The first reading of Baroness Bowles' bill will happen on September 5.
The Financial Conduct Authority did not respond to a request for comment.
david.thorpe@ft.com
