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Changing times

18 February 2020

The investment company industry in 2000, 2010 and 2020.

The investment company industry has transformed itself over the past 20 years, new research from the Association of Investment Companies (AIC) reveals.

Industry assets have more than doubled between 2000 and 2020, from £73bn to £187bn (excluding 3i and VCTs) driven by strong performance and fundraising. The investment company industry’s assets including 3i and VCTs have increased from £79.3bn1 in 2000 to £201bn in 2020.

Alongside the growth in assets, the average investment company has more than doubled in size from £218m in 2000 to £560m in 2020, providing improved liquidity for investors.

This growth in size is also evident from looking at the ten largest investment companies at the beginning of each decade (full lists included below). Their combined assets totalled £17.8bn, £15.8bn and £38.7bn in 2000, 2010 and 2020 respectively. The largest investment company, Scottish Mortgage, joined the FTSE 100 in 2017.

Meanwhile, the average yield of an investment company has increased markedly, from 1.72% in 2000 to 3.98% in 2020. This is despite a narrowing of the average investment company discount, from 11.5% in 2000 to just 1.9% in 2020, close to an all-time low. The combination of a larger yield and a narrower discount reflects the greater focus of the investment company industry on income-generating assets, as investors have turned to investment companies for income in an era of low interest rates.

 

2000

2010

2020

Total assets (excluding 3i and VCTs)

£73bn

£76bn

£187bn

% of total assets invested in alternatives

6%

32%

37%

Average size of an investment company

£218m

£246m

£560m

Number of investment companies

333

309

334

Size of largest investment company

£3,223m

£2,677m

£9,254m

Average industry discount

11.5%

11.1%

1.9%

Average industry gearing

-

7%

7%

Average industry yield

1.72%

2.48%

3.98%

Source: AIC/Morningstar ex 3i ex VCTs. 2000 data is from 31/01/00, except for industry assets which are from 31/12/99. 2010 data is from 31/01/10. 2020 data is from 31/01/20.

The rise of alternative assets

One of the most striking changes in the investment company industry over the past 20 years is the increasing prominence of alternative assets. In 2000, only 6% of investment company assets were invested in alternatives, most of this in private equity. By 2010, this had increased to 32%, with new sectors emerging such as Hedge Funds, Property Direct – UK (now Property – UK Commercial) and Sector Specialist: Infrastructure (now Infrastructure).

Fast forward to 2020 and 37% of investment company assets are invested in alternatives. New sectors created over the past ten years include Renewable Energy Infrastructure, Growth Capital, Royalties and the three new debt sectors: Debt – Direct Lending, Debt – Loans and Bonds and Debt – Structured Finance.

Sectors that have bitten the dust over the past 20 years include Tea Plantations, Forestry & Timber and Restaurants, Pubs and Brewing.

The largest investment companies at the start of each decade demonstrate the rise of alternative assets. In 2000 and 2010 the biggest companies were dominated by those investing in equities with only Electra (Private Equity) investing in alternative assets. Of the ten largest today, six are in alternative sectors and four of these launched within the decade.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Investment companies have consistently adapted to meet investors’ needs over the 21st century so far. Strong performance and fundraising have seen investment company assets under management reach new highs and the average investment company has more than doubled in size to over £500 million, improving liquidity for investors.  

“The rise of alternatives, which now represent 37% of investment company assets, has provided investors with new ways to diversify their portfolios. Investment companies have provided a natural home for a range of income-producing alternative assets, including infrastructure, renewable energy infrastructure, property and debt. Their closed-ended structure means managers have been able to focus on long-term performance without the risk of fire sales or suspensions.

“Whilst no-one knows what the future holds, the investment company sector has continued to reinvent itself to meet investors’ financial needs and this innovation shows no sign of abating.”

2000 - Ten biggest investment companies by total assets

Position

Investment

company

AIC sector

Total assets as at 31/12/1999

(£m)

10yr share price total return

31/01/1990 - 31/01/2000

(%)

1

Foreign & Colonial

Global

3,223

348.30

2

Scottish Mortgage

Global

2,296

397.90

3

Witan

Global

2,132

383.40

4

Alliance Trust

Global

2,014

345.50

5

Edinburgh Investment

UK All Companies

1,983

299.90

6

Scottish Investment Trust

Global

1,547

314.60

7

Electra

Private Equity

1,375

340.18

8

JPMorgan Fleming Mercantile

UK All Companies

1,106

341.90

9

JPMorgan Fleming Japanese

Japan

1,104

208.20

10

Monks

Global

978

327.60

Total top 10

 

17,758

 

Source: AIC/Morningstar ex 3i ex VCTs.

2010 - Ten biggest investment companies by total assets

Position

Investment company

AIC sector

Total assets

as at 31/01/2010

(£m)

10yr share price total return

31/01/2000 - 31/01/2010

(%)

1

Alliance Trust

Global

2,677

32.55

2

Foreign & Colonial

Global

2,031

109.78

3

RIT Capital Partners

Global

1,890

161.84

4

Scottish Mortgage

Global

1,880

37.45

5

Templeton Emerging Markets

Global Emerging Markets

1,739

289.71

6

Mercantile

UK All Companies

1,212

109.78

7

BlackRock World Mining

Commodities & Natural Resources

1,132

522.06

8

Caledonia

Global

1,118

209.74

9

Witan

Global

1,095

22.14

10

Edinburgh Investment

UK Equity Income

998

14.55

Total top 10

 

15,773

 

Source: AIC/Morningstar ex 3i ex VCTs.

2020 - Ten biggest investment companies by total assets

Position

Investment company

AIC sector

Total assets as at 31/01/2020

(£m)

10yr share price total return

31/01/2010 - 31/01/2020

(%)

1

Scottish Mortgage

Global

9,254

560.52

2

Pershing Square Holdings

Hedge Funds

5,881

Launched in 2014

3

F&C Investment Trust

Global

4,358

247.27

4

RIT Capital Partners

Flexible Investment

3,515

144.20

5

Alliance Trust

Global

3,075

230.27

6

HICL Infrastructure

Infrastructure

2,902

155.12

7

Tritax Big Box REIT

Property - UK Commercial

2,711

Launched in 2013

8

International Public Partnerships

Infrastructure

2,363

132.85

9

Amedeo Air Four Plus

Leasing

2,330

Launched in 2015

10

Greencoat UK Wind

Renewable Energy Infrastructure

2,319

Launched in 2013

Total top 10

 

38,708

 

Source: AIC/Morningstar ex 3i ex VCTs.

-Ends-

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Notes

  1. Total assets of VCTs at 31 December 1999 have been estimated. VCTs were included in the AIC universe from September 2006.
  2. All data is for all investment companies in the AIC universe (members and non-members) excluding 3i and VCTs. Source of all data is AIC/Morningstar.
  3. Data on industry assets for 2000, 2010 and 2020 is from 31 December 1999, 31 January 2010 and 31 January 2020 respectively.
  4. Discount data is the ex-par weighted daily discount of investment companies excluding 3i and VCTs as at 31 January 2000, 31 January 2010 and 31 January 2020.
  5. 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 363 members and the industry has total assets of approximately £201 billion.
  6. 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.
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Media enquiries

Annabel Brodie-Smith
Communications Director
Tel: 020 7282 5580
annabel.brodie-smith@theaic.co.uk
@annabelbrodies
@aicpress

Elmley de la Cour
Communications Manager
Tel: 020 7282 5583
elmley.delacour@theaic.co.uk
@aicpress

William Sanderson
Communications Executive
Tel: 020 7282 5584
william.sanderson@theaic.co.uk
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