A strong majority of closed-end investment trusts with open-end “sister funds” have outperformed those funds over the past 10 years, according to research by the Association of Investment Companies (AIC).

UK investment trust companies manage assets of around £270 billion and a substantial number of the trusts are managed by Scotland-based asset managers including Baillie Gifford and Aberdeen.

In 28 out of 32 cases (88%) where a closed-end investment trust and an open-end fund have had the same fund manager for the past 10 years, the investment trust has outperformed.

Trusts have also fared well over shorter time periods.

Over both one year and three years, 83% of trusts have outperformed open-end funds with the same manager, while over five years, 73% of trusts have delivered higher returns than their sister open-end funds.

Nick Britton, Research Director of the Association of Investment Companies (AIC), said: “It’s good to see investment trusts’ natural advantages help managers to generate strong performance over the past decade.

“Being able to gear is clearly helpful, as is the flexibility to invest in less liquid assets. With investment trusts, managers can also pick their moment to buy and sell investments, which isn’t always possible with funds that have to follow investment flows.

“This research shouldn’t be taken to mean that investment trusts will always outperform, but it does suggest that long-term investors who ignore trusts may be missing out.”

The AIC said: “Over the past 10 years, the average investment trust with a sister fund returned an extra £37 per £100 invested compared to the fund, or an additional 1.7 percentage points of return per year …

“Over one year, the average investment trust returned an additional £4 per £100 invested compared to its open-ended sister fund, over three years £12, and over five years an additional £8 for every £100 invested.

“In percentage terms, the outperformance amounted to 4.4, 3.2 and 1.3 percentage points per year for the same time periods.”