Confidence and Education Gap, not access, is the biggest barrier to investing in Investment Trusts in the UK 

Nearly one in five (19%) UK adults have never heard of investment trusts, according to new research¹ from Invesco, a leading global asset manager, highlighting a significant gap in financial understanding at a time when policymakers are seeking to shift more savers into long-term investments.

The survey of more than 2,000 UK adults reveals a stark divide in financial literacy and confidence between investors and cash savers. While nearly a quarter (24%) of existing investors say they are familiar enough with investment trusts to explain how they work, this falls to just 4% among cash savers. Two-thirds (66%) of cash savers say they have either never heard of investment trusts or have heard of, but do not understand what they are, suggesting that limited product literacy may be acting as a barrier to moving savings into long-term investments.

The findings come as regulators push forward with reforms aimed at improving retail engagement, including the transition to the Consumer Composite Investments regime (CCI), the FCA’s proposed targeted support framework and the UK Government’s retail investment campaign stemming from the Leeds Reforms. The findings highlight the scale of the challenge, suggesting that limited understanding may be contributing to persistent financial inertia.

Strikingly, respondents are nearly twice as likely to say they could confidently explain cryptocurrency (19%) compared to investment trusts (11%), despite the latter’s long-established role in UK financial markets. Only 4% say they have never heard of cryptocurrency. This compares with 19% who have never heard of investment trusts, and 37% who say they have never heard of ETFs.

Confidence in investment decision-making is low, with just 13% saying they would have a high level of confidence in choosing an investment product themselves. Despite this, only 15% turn to an independent financial adviser for information. Instead, more than a third (37%) rely on friends and family, while 17% turn to financial influencers and 16% use social media.

This lack of confidence and understanding of investment trusts appears to translate directly into inaction. Despite the Bank of England cutting interest rates from 5.25% in August 2024 to 3.75% today, nearly half (45%) of cash savers say they have made no changes to how they manage their money. This compares to 77% of investors² who have taken action.

There are, however, some signs of latent demand. Nearly one-third (30%) of cash savers say they would be interested in learning more about investment trusts, indicating a sizeable opportunity to improve engagement through better education and support.

Will Ellis, Head of Specialist Funds at Invesco, said: “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.

“Overcoming this barrier will require more than better tools and clearer literature. There’s a need for accessible, practical education to build confidence and help people understand both the role of investment products and the risks involved, so they can make informed long-term financial decisions.”

As regulatory reforms continue to evolve, Invesco believes improving comprehension of investment products and the risks and opportunities they present, will be critical to narrowing the advice gap and supporting better financial outcomes for UK consumers.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “We strongly support the UK government’s retail investment campaign to get more people investing. 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.

“It’s never too late to start investing. Investing as little as £50 a month over the last ten years in the average investment trust – a total of £6,000 – would have built up a nest egg worth £10,186³.”

Will Ellis concludes: “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. To help address this, Invesco is launching a new Education Hub, which will be available on our website from the summer, offering simple videos and articles designed to explain what investment trusts are and how they work.”