For over 150 years investment companies have opened up a wealth of opportunity – allowing everyone from large institutions to private individuals to harness the potential of many different markets, sectors and industries.
Read more in our report: 'Investment companies: Democratising capital, funding growth and meeting investors’ needs'
The investment company sector manages over £255bn of assets, a figure that has more than doubled over the past ten years.
Over £6bn of investment company assets are in venture capital trusts (VCTs), which invest in small, growing UK companies.
Mainstream equity funds make up a large portion of investment company assets. However, in recent years, investment companies investing in alternative assets such as property, private equity and infrastructure have proliferated and thrived.
The average investment company traded at a discount of more than 11% at the height of the Covid-19 pandemic, but this swiftly rebounded to low single digits. Discounts have widened again amid the market volatility this year. The discount at the end of October 2023 fell to -16%, the widest month-end discount since the financial crisis.
Investment companies offer strong long-term performance. Over the past ten years, the average company has returned approximately 10% a year. However, past performance must not be relied on as a guide to the future.
The average investment company yields over 4%, a ten-year high (excluding investment companies with no yield).
New investment companies are created through initial public offerings (IPOs), but can raise further funds throughout their lives. Money raised by existing companies (called secondary fundraising) has far exceeded IPO fundraising in recent years.
"The investment company sector is constantly changing to meet the needs of investors. That's why it has survived wars, recessions and market crashes for the last 150 years."
Annabel Brodie-Smith, Communications Director at the AIC
How do investment companies compare to other funds?
The table below allows you to compare the performance of investment companies in various AIC sectors to the performance of open-ended funds (OEICs and unit trusts) in the equivalent Investment Association (IA) sectors.
The red areas of the table show where investment companies have outperformed open-ended funds, and the blue areas show where open-ended funds have outperformed investment companies.
We update this table quarterly to help investors understand how the performance of investment companies compares with open-ended funds over time.
Investment companies will not always perform better than other funds. However, they do have some advantages that can help their performance over time. For more information, see our Guide to investment companies.
Share price total returns on £100 to 31 October 2023
Source: AIC/Morningstar. All data to the end of October 2023. Sector averages are unweighted share price total return in pounds rebased to £100.
Monthly updates include key investment company data such as assets under management by sector, fundraisings and IPOs.
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Notes & disclaimer
Please refer to our glossary for more detailed definitions of our data points.
- Source: AIC/Morningstar. Graph data will be updated for the previous month-end on the seventh working day of each month. Discount, performance and yield figures exclude VCTs.
- Discounts are weighted by market capitalisation of company and are based on cum-income, fair-value net asset values (known as cum fair NAVs).
- Share price performance figures are weighted by market capitalisation unless otherwise stated. NAV performance is based on, and weighted by, cum fair net assets.
- Average yields are weighted and include dividends paid from capital profits but exclude any special dividends.
- Fundraising information does not include issuance of shares from treasury.
- This data has been prepared by the AIC using Morningstar data and is for information purposes only. It is not an invitation or inducement to engage in investment activity nor does it purport to contain information on which to base investment decisions. Whilst the AIC and Morningstar have taken all reasonable steps to verify the statistics on our website, neither the AIC nor Morningstar accept responsibility for any errors or omissions in this publication or for any loss of any nature incurred by any person using this publication, howsoever caused. Past performance is not a guide to future performance and the performance of individual investment companies can diverge significantly from any average figures. Investors are advised to seek independent financial advice before making any investment decisions.