Investment Trusts  

Fundraising from investment trusts hits all-time high

Fundraising from investment trusts hits all-time high

A record amount of money was piled into investment trusts this year with existing companies raising £6.9bn through secondary fundraising.

Data from the Association of Investment Companies showed the year also included the highest ever H1 period — with £4bn raised — and the best ever month, when £1.3bn was placed into existing trusts in October.

Of the record £6.9bn, £1.6bn was raised by trusts in the Renewable Energy Infrastructure sector. This sector was also viewed as the “most attractive” by fund managers for the next five years.

This was followed by Infrastructure, with £952m raised, alongside UK Commercial Property and Royalties, which raised £753m and £424m respectively.

Paul Gibson, financial planner at Granite Financial Management, said: "If you favour active fund management, investment trusts tend to have lower costs and that may be a factor [in the increased amount of fundraising].

"I suspect the track record of increasing dividends from some investment trusts has also been a consideration for those seeking yield."

On an individual basis, the Renewables Infrastructure Group saw the biggest round of fundraising as investors piled £530m into the trust.

Following close behind was Greencoat UK Wind, which raised £506m, and Hipgnosis Songs Fund with £423m.

Top 10 fundraisers of 2019
CompanySector£m raised
Renewables Infrastructure GroupRenewable Energy Infrastructure530
Greencoat UK WindRenewable Energy Infrastructure506
Hipgnosis SongsRoyalties424
Sequoia Economic Infrastructure IncomeInfrastructure362
SmithsonGlobal Smaller Companies337
Merian ChrysalisGrowth Capital275
Tritax Big Box REITProperty - UK Commercial250
Finsbury Growth & IncomeUK Equity Income225
3i InfrastructureInfrastructure223
LXI REITProperty - UK Commercial200

By comparison the number of investment trusts launching to market and the amount raised for new trusts through initial public offerings was subdued.

Only eight trusts were launched this year, raising £1.37bn. Last year, 19 trusts were brought to market and raised £3bn between them.

Other key trends in the sector included the move to tiered fees. Over the past year six companies have moved to tiered fees and to date 39 per cent of investment companies now use the structure.

A recent report from the Chartered Financial Analyst Institute found tiered fees were the “best for retail investors” and were an “effective way of aligning the interests of managers and investors”.

imogen.tew@ft.com

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