Assets in investment trusts hit a record high at the end of June, according to figures from the Association of Investment Companies, despite most sectors having faced an uphill struggle during the first half of the year.
According to the AIC’s data, the sector’s total assets under management reached £141bn at the end of last month, having almost doubled in a decade from the £76bn figure reported at the end of June 2006.
This marks an extra £5bn in assets under management compared to the end of May, and almost £9bn since the end of January.
Ian Sayers, chief executive of the Association of Investment Companies, said it is “reassuring” to see industry assets standing at an all-time high, particularly bearing in mind it has been a challenging start to the year.
Figures show the infrastructure sector has seen the most rapid rate of growth, hitting £8bn at the end of last month, from £246m in 2006.
The global sector has maintained its position as the largest investment company sector with total assets of £22bn, which is down slightly from the £23bn reported 10 years ago.
This structure allows managers to take a long-term view without having to deal with large scale redemptions. Ian SayersMeanwhile, property has crept into second place on the sector size list, jumping up to £13bn from £6bn posted in 2006 when it was the fourth largest sector.
This comes as experts encouraged investors to choose closed-ended property investments over open-ended structures, after several large real estate funds were forced to suspend trading following a surge in redemption requests.
| Largest sectors by assets at 30 June 2016 | Total assets (£m) | Largest sectors by assets at 30 June 2006 | Total assets (£m) |
| 1. Global | 21,709 | 1. Global | 22.668 |
| 2. Property | 13,207 | 2. Private Equity | 10,063 |
| 3. Private Equity | 12,559 | 3. UK Equity Income | 8,416 |
| 4. UK Equity Income | 10,137 | 4. Property | 6,334 |
| 5. Infrastructure | 7,599 | 5. UK All Companies | 4,415 |
Source: AIC
Mr Sayers said the rise of “alternative” assets, such as property and infrastructure, demonstrates the demand for yield and the suitability of the closed-ended structure when it comes to investing in illiquid assets.
He said: “This structure, which allows managers to take a long-term view without having to deal with the problems of large scale redemptions, also means that the sector is well-placed to weather any challenges that lie ahead.”
Both the private equity and UK equity income sectors have been ranked a notch lower compared to total assets a decade ago, with private equity now in third place, hitting £13bn, and the UK equity income ranked fourth, with total assets of £10bn.
Patrick Connolly, certified financial planner at Chase de Vere, said: “It wouldn’t be surprising if investors are looking at investment trusts to get exposure to commercial property.
“These managers aren’t forced to sell properties to deal with redemptions, but as investment trusts are listed on the stock market, their price often moves up and down with wider market movements.
“This defeats one of the main reasons for investing in commercial property, which is to get diversification alongside other asset classes, including equities, held in a portfolio.”
katherine.denham@ft.com
