Brexit prompts investment trust share price jump

Brexit prompts investment trust share price jump

More than half of the investment trusts in the UK have seen their share price increase since the UK voted to leave the European Union, according to research house Stifel.

Despite concerns fixated on falls in the stock market following the EU referendum, Stifel found 129 out of 221 trusts with a market cap of £100m had seen an increase in their share price between 23 June and 1 July.

This compares with the 92 trusts which saw prices fall.

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The investment companies which topped the list with the largest price rises over this period were the BlackRock Latin American trust with a 14.9 per cent increase, JPMorgan Chinese with a 14.4 per cent shift, and the Aberdeen Emerging Market Investment company, which moved up 12.5 per cent.

Research also found two thirds of London-listed investment trusts had benefitted from the Brexit vote after seeing price increases.

Iain Scouller, analyst at Stifel, said the closed-ended vehicles had been helped by overseas equity investments and non-sterling exposure, together with the rise in the FTSE 100 Index.

Price rises have emerged despite widening discounts on trusts investing in Europe, real estate and UK equity income sectors.

By comparison, the sectors which have seen the largest price gains are emerging markets, Asia, Japan, mining and international equity funds.

Alternative investments, such as infrastructure funds, have also performed well, with relatively low-price volatility.

Paul Lindfield, director of wealth management of Manchester-based Sedulo Wealth Management, said Brexit has caused volatility, pricing anomalies, and a flight to defensive stocks, such as oil and resourses.

“In this current climate, a pragmatic stock picker can make money, so these figures don’t surprise me,” he said, adding it’s a good time to invest active managers who are not confined to a set mandate and have the flexibility to change their positioning.

Mr Lindfield said price rises are not limited to investment trusts and applies to actively managed open-ended vehicles as well.

“Now is the time to invest in a manager who is going to be tactical in their decisions because we are in unchartered waters, both economically and politically.”

He said his firm are currently opting for “tried and trusted” active managers such as Threadneedle.