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Record year for investment trusts as younger investors get turned onto unique attractions

Over £14.2bn was raised in new issues and secondary fundraisings by the end of November

While investment trusts haven’t always got investors hearts racing, they have become sexy during the pandemic.

Data from the major investment platforms revealed that a large part of the drive for investment companies in the past two years has come from younger investors, with the UK’s second largest platform noting that the highest investment trust exposure was among customers aged under 25.

Leaving aside for today the reasons why investors have flocked to investment trusts, the bald facts are that it has been a record year in terms of fundraising.

Over £14.2bn was raised in new issues and secondary fundraisings by the end of November, according to data analysed by the Association of Investment Companies (AIC), eclipsing the previous record of £10bn from 2014 and £9bn from 2017 by some distance.

Some £3.7bn was raised via initial public offers (IPOs), the highest since 2014, and the first time above £3bn since 2015.

The year got off a good start with Cordiant Digital Infrastructure Ltd (LSE:CCRD) raising £370mln in February, but the two largest were in the latter months of the year, with Petershill Partners PLC (LSE:PHLL) raising over £1bn in October, followed by Pantheon Infrastructure PLC (LSE:PINT) drumming up £400mln in November.

Five of the new cohort of investment trusts also saw their shares deliver quick double-digit gains for investors, led by Literacy Capital PLC’s (LSE:BOOK) 60%-plus surge, followed by Taylor Maritime Investments Ltd (LSE:TMIP), Seraphim Space Investment Trust PLC (LSE:SSIT), HydrogenOne Capital Growth PLC (LSE:HGEN) and Digital 9 Infrastructure PLC (LSE:DGI9).

READ: The best performing investment trusts and sectors may surprise you

The secondary placings market was where even more of the action was taking place, with £10.7bn of new funds raised and led to the record year.

This was more than the previous record of £7.4bn in 2019, and £6bn-plus in 2017 and 2020.

In terms of sectors, it’s no surprise that renewable energy infrastructure trusts attracted the most funding, with £2.4bn raised, followed by the combined capital raisings by the various property sectors, which totalled £2.2bn.

More general infrastructure followed, with £987.8mln, before the growth capital sector at £802.53mln.

“A lot of this is in alternative sectors such as renewable energy, infrastructure and growth capital, where assets are hard to buy, sell and value,” said Nick Britton, head of intermediary communications at the AIC.

“Investment companies have a natural advantage in this space because of their closed-ended structure, where they don’t have to meet daily redemptions and can invest in these assets for as long as the manager feels is right.”

AIC sectorFunds raised (£mln)
Renewable Energy Infrastructure2435.03
Infrastructure987.75
Growth Capital802.53 
Flexible Investment737.72
Global Smaller Companies612.90 
Property – UK Commercial578.00
Property – Europe556.02
Property – UK Logistics454.20
Hedge Funds406.79
Property – UK Residential404.83
Royalties306.12  
UK Equity Income305.14
Biotechnology & Healthcare299.49
Property – UK Healthcare220.00
Asia Pacific181.51
Global157.87
Environmental142.70
UK Smaller Companies125.96

Britton says it is remarkable that two out of the three sectors that raised most money this year – renewable energy infrastructure and growth capital – didn’t even exist a decade ago, and the main infrastructure sector has only been around since 2006.

“While the investment company structure is more than 150 years old, it has proved itself very adaptable to meeting the needs of today’s investors, and has showed its resilience throughout the global pandemic. We look forward to seeing what next year holds.”

 

Read More: Record year for investment trusts as younger investors get turned onto unique attractions

2021-12-09 07:50:00

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