The People’s Trust is a new scheme that aims to shake up the industry by investing for the long-term in order to support businesses looking to “achieve sustainable, long-term growth".
The trust is being set up by Daniel Godfrey (pictured, below), who was ousted as chief executive of the Investment Association last year due to a furore over his attempts to reform the investment fund industry.
Godfrey’s aim is to create an investment trust that offers people a way to invest without the short-term focus and conflicts of interest that he belives mar many other investment vehicles.
The fund will invest for seven year timespans – the typical length of an economic cycle – which is far longer than most investment trusts.
“We will encourage companies to innovate, invest in their people, pay their taxes and protect the environment,” says Godfrey.
“With The People’s Trust backing them long-term, those companies should be able to deliver better returns for you, better growth for the economy and better jobs for their people.”
How to invest
In a typical seven-year period, the target total return will be 7% p.a. compound, after costs, based on an assumption of a 2% inflation rate.
Godfrey is hoping to raise at least £100,000 in the coming months, with the public able to invest from just £20 (or £10 for those aged under 35).
Investors, or ‘founders’, will get reduced charges when they invest in the trust once it’s up and running.
In a move away from most investment schemes, the trust’s managers will not be paid bonuses.
Instead, part of their salary will be shares in the trust, which they will have to hold for seven years in order to align their interest with savers.
“There is a need for improvement in the investment industry, particularly around how customers are treated and how money is managed,” says Godfrey.
“Costs and charges could be much simpler and more transparent, making customers better informed.
“Short-term pressures and incentives could be replaced with longer-term thinking and investing, creating more growth.”
Investors will be able to buy and sell shares in the People’s Trust on the stock market with the money raised then invested in shares and other assets.
Godfrey has also said some of the money will be loaned to charities and community interest groups at ‘modest’ interest levels.