Investment company investors have 'plenty to celebrate'

Communications director Annabel Brodie-Smith told FTAdviser the sector’s assets were at an "all-time high", having increased about fivefold to a total of £274bn over the past two decades.

This year has seen the most fundraising ever in the sector, she added, with £13bn raised. This compares to the previous high of £10m seen in 2014.

The year has also seen the largest ever amount raised by existing investment companies – so-called secondary fundraising – at over £10bn.

"Nobody wants another collapse like Woodford."Annabel Brodie-Smith

Brodie-Smith said the new issues in 2021 had offered “innovative and exciting” opportunities to invest in a wide range of assets from digital infrastructure, renewable energy, including energy storage and hydrogen to space technology, and life sciences properties.  

“There have been 15 new issues this year raising £3.7bn, a big contrast to the Covid-affected 2020, when eight issues raised just over £1bn," she said. 

“The biggest issues this year, just considering the new money raised, were Petershill Partners (£1bn), Pantheon Infrastructure (£400m) and Cordiant Digital Infrastructure (£370m). 

“Interestingly, two out of the three sectors which raised the most money didn’t even exist ten years ago – Renewable Energy Infrastructure and Growth Capital, whereas the Infrastructure sector has been around since 2006.”

Concerns

However, the AIC has “serious concerns” around the launch of the long term asset fund (Ltaf).

“We have several concerns about the Ltaf which will invest in illiquid assets like private equity and infrastructure but have a minimum redemption notice period of 90 days,” she said.

“We think the minimum notice period is way too short for these sorts of assets.

“More importantly, we do not think the Ltaf should be promoted to retail investors until the structure has been tested in different market conditions and through the economic cycle.

"Nobody wants another collapse like Woodford," she said.

“In our research on Woodford, 69 per cent of advisers believed the FCA should impose stronger investor protections where illiquid assets are held in funds. 

“However, the FCA still plans to consult on widening the distribution of Ltafs to retail investors in the first half of 2022.”

sally.hickey@ft.com