The saying goes that “all that glitters is not gold”, but after a year of political shocks and uncertainty, it seems that investment companies with exposure to the ‘shiny stuff’ – whether gold, precious metals, or natural resources have made a comeback.
The top performing investment company sector over the year to date is Sector Specialist: Commodities and Natural Resources, up 72% - something of a respite for a sector that has fallen in each of the previous four calendar years.
Given the post Brexit referendum sterling weakness, it is not surprising to see overseas focussed investment companies also leading the way in performance terms over the year to date, with North America the second top performing sector, up 34%, followed by Global Emerging Markets and Global Equity Income (each up 31%), and Country Specialists: Asia Pacific (up 28%).
Good performance on average – but not all plain sailing
The closed-ended sector has had a good year in share price total return terms, with the average investment company up 12%, no doubt boosted by the sector’s high overseas exposure. But it hasn’t all been plain sailing, and UK focussed investment companies post the referendum have had a more difficult time, with the UK Smaller Companies sector down 10% and the UK All Companies sector down 4%.
Conversely, in 2015 the reverse was true: the UK Smaller Companies sector outperformed the average investment company by 15 percentage points in the previous year to 30 November 2015, whilst the UK All Companies sector beat the average investment company by 12 percentage points over the same timeframe.
Annabel Brodie-Smith, Communications Director, Association of Investment Companies (AIC) said: “It’s been a year of surprises, and investment company performance has consequently had its ups and downs but performance for the sector as a whole has been resilient over the year. Sectors that had a challenging time in 2015, like Commodities and Natural Resources and Global Emerging Markets, are this year’s ‘come back kids’, with some UK focussed sectors having a more difficult time given sterling’s weakness.
“2016 highlights the importance of having a balanced portfolio and a long-term view. One year’s underperformers can be the next year’s winners showing how important it is not to react to short-term market movements. The investment company sector houses a broad variety of sectors, risk profiles and geographical exposure, and investors need to consider their investment objectives and risk profile when looking at potential investments. Some investors might like to consider monthly investing to help smooth out some of the highs and lows in the price of shares. If investors have any concerns they should speak to a financial adviser.”
Top performing sectors – share price % total return to 30 November 2016
|AIC sector||1 year||3 years||5 years||10 years||YTD|
|Overall weighted average||13.34||31.53||49.99||104.59||12.10|
|Sector Specialist: Commodities & Natural Resources||66.06||6.63||-35.59||6.31||71.83|
|Global Emerging Markets||29.89||12.44||22.66||117.47||31.20|
|Global Equity Income||30.75||26.98||67.80||132.14||31.02|
|Country Specialists: Asia Pacific||32.19||73.66||120.10||84.34||27.94|
The VCT sector was up an average of 3% over the year to date. Leading the pack in sector terms were VCT Specialist: Environmental and VCT Generalist, each up an average of 4%, and VCT: AIM Quoted, up 3%.
VCT sectors – share price % total return to 30 November 2016
|AIC sector||1 year||3 years||5 years||10 years||YTD|
|VCT weighted average||5.24||34.27||61.62||77.58||3.42|
|VCT Specialist: Environmental||8.49||29.87||56.20||4.22|
|VCT AIM Quoted||3.95||24.41||88.19||36.59||3.03|
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- Data is to 30 November 2016 based on the last official close price at the month end, on a % share price total return basis. No expenses taken into account. Source: AIC using Morningstar.
- Discrete % annual returns - % share price total return
AIC sector 30/11/2011 - 30/11/2012 30/11/2012 - 30/11/2013 30/11/2013 - 30/11/2014 30/11/2014 - 30/11/2015 30/11/2015 - 30/11/2016 Overall weighted average ex VCTs 11.76 21.08 9.77 2.96 13.34 VCT weighted average 8.37 14.38 8.59 7.69 5.24 Country Specialists: Asia Pacific 8.87 15.83 34.80 -3.12 32.19 Global Emerging Markets 5.69 3.53 7.02 -18.79 28.89 Global Equity Income 16.02 13.24 6.29 -8.80 30.75 North America 10.07 24.34 15.39 -4.81 33.44 Sector Specialist: Commodities & Natural Resources -10.06 -19.60 -13.70 -25.64 66.06 VCT Generalist 8.39 11.98 9.60 7.22 6.20 VCT Specialist: Environmental -2.70 15.37 11.93 6.18 8.49
- The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed ended investment companies, incorporating investment trusts and other closed ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help Members add value for shareholders over the longer term. The AIC has 342 members and the industry has total assets of approximately £154 billion.
- Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.