One in five people have never heard of investment trusts, according to a survey by Invesco, with two-thirds of cash savers having either never come across them or acknowledging they exist but lacking understanding of what they are.
Only a quarter of investors were able to explain how they work, a figure that drops to 4% among cash savers. In total, 11% of those surveyed said they could confidently explain investment trusts. In contrast, almost one in five (19%) said they understood cryptocurrencies.
Will Ellis, head of specialist funds at Invesco, said: “We often hear from people who keep their savings in cash that they don’t feel they know enough to start investing. This survey suggests that many of them don’t even have investment trusts on their radar.”
It comes at a time when people are being encouraged more than ever to invest rather than save. This includes a reduction in the cash ISA allowance for under-65s from next year to £12,000 from £20,000. Savers will still be able to put £20,000 away in ISAs, but the full amount can only go into stocks and shares products.
However, there is a lack of confidence when it comes to investing, the survey highlighted, with around 13% stating they would be happy picking their own investments.
More than a third would consult friends or family, while 17% turn to financial influencers, 16% look to social media and just 15% seek regulated financial advice.
“These findings highlight a fundamental challenge at the heart of the UK’s savings and investment landscape. This is not just an awareness issue, it’s a confidence gap. While policymakers are rightly focused on improving access through targeted support and clearer disclosure, a significant segment of the population lacks the understanding needed to take the first step into investing,” said Ellis.
Annabel Brodie-Smith, communications director of the Association of Investment Companies (AIC), said: “Savers can be nervous about investing in the stock market and often don’t know where to start, so improving financial literacy and giving people a better understanding of risk, return and the value of long-term investing will help.
“Creating an investment culture won’t happen overnight. It needs to be built on understanding and trust, with a real push to provide access to financial education for all.”