In the world of UK investment trusts, there’s a clear divide emerging between the big players and the average Joe.
While institutional investors like pension funds and asset managers are ramping up bets on alternative assets such as private equity, hedge funds, renewable energy, and property, retail investors are largely sticking to safer, more familiar ground: stocks in the UK and other developed markets.
That’s according to a new report from Warhorse Partners, which analysed ownership patterns across 177 investment trusts worth a collective £135 billion at the end of 2025.
The findings highlight how different investor groups are navigating a post-pandemic economy marked by high interest rates, geopolitical tensions, and a search for yield beyond traditional stocks and bonds.
Retail is now king
Retail investors, often everyday people saving through platforms, individual accounts, or even old-school paper certificates, now hold the largest slice of the pie. They control 37% of the sector by value, up from 34% five years ago, with holdings totalling £50.5 billion.
That’s a significant 11.5% increase in value over 2025 alone, even as the number of shares they own grew by a more modest 4.6%. Since 2020, retail ownership has surged 34% in share count, outpacing other groups.
“Retail investors have become the dominant force in investment trusts,” the report notes, attributing the growth to accessible platforms and savings schemes that make it easier for individuals to dip into these funds.
But their preferences lean conservative: The bulk of their money flows into trusts focused on UK equities and developed markets, where familiarity and perceived stability reign supreme.
Where is the big money going?
By comparison, institutional investors (which include endowments, insurance companies, and big funds) hold 27% of the market, valued at £35.8 billion.
While their share count dipped 5.4% in 2025, the value of their holdings climbed 5.5%, thanks to rising asset prices. Over the past five years, institutions have boosted their share count by 25.6%, adding £2.6 billion in value.
The report notes that this is primarily being driven by a hunger for alternatives, with institutions showing ‘significant and increasing interest’ in non-traditional investments.
Private equity trusts, which invest in unlisted companies, hedge funds for sophisticated strategies, renewable energy for green plays, and property trusts for real estate exposure, are all seeing inflows from this crowd.
It’s a shift that reflects broader trends: With bond yields volatile and stock markets choppy, institutions are chasing higher returns in less correlated assets.
Wealth managers, who oversee portfolios for high-net-worth clients, aren’t far behind institutions in size, they hold 28% of the market at £38.3 billion, but their behaviour mirrors retail more closely. Like everyday investors, they favour UK and developed-market stocks. However, they trimmed positions in 2025, selling off 1.3 million shares (an 8.8% drop), though rising prices lifted their total value by 4.4%.
Smaller players round out the picture: Regional independent brokers hold 6% (£8.1 billion), up 8% year-over-year, while adviser platforms account for just 2% (£2.6 billion) with flat growth.
Strong results – but concentration is a risk
The overall sector has been on a tear, with the average investment trust delivering a 12.1% total return in 2025, per the Association of Investment Companies (AIC).
But the report warns that concentration is a real risk. The top 10 holders in each segment – retail, institutions, and wealth managers – dominate, which could amplify market swings if sentiment shifts.
Investment trusts, unlike open-ended funds, trade like stocks on exchanges, offering liquidity and often at discounts to their net asset values. They’re a barometer for investor appetite, and this divergence suggests retail folks are playing it safe amid economic uncertainty, while pros hunt for edges in alternatives.
As interest rates potentially ease in 2026, watch for whether retail catches the alternatives bug, or if institutions double down further.
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