The manager of a £1 billion fund and a £320 million trust – both with 10% invested in gold – says the trust's gold is cheaper to buy and safer to own than the gold in the much larger fund. Sebastian Lyon manages the Trojan O fund, which owns around £120 million of gold via exchange traded funds (ETFs), as well as the Personal Assets investment trust which has £45 million in a gold bullion account which has lower charges. Lyon said he could own these high levels of gold for the next five years. With such a long time frame and such large quantities of gold involved a difference in the costs could have an impact on performance. The trust and the fund are run along similar lines and, unlike other trusts, Personal Assets has a strict discount control mechanism that has kept the shares trading around net asset value. Many investment trusts trade at a discount to net asset value which means the shares are worth less than the assets they represent. However, over the last three years the Trojan O Fund, which is in Citywire Selection our shortlist of investment ideas, has returned more than the trust: 38% compared to Personal Assets' 34% share price gain and 32% rise in net asset value. Funds are not allowed to own physical assets like gold but they can own it via ETFs which are shares. However both investment options are open to investment trusts.

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