The past two weeks have seen sharp market falls as investors have reacted to the global spread of COVID-19. US markets suffered their worst week since the global financial crisis and the FTSE 100 touched its lowest level since the EU referendum in 2016. Despite central bank intervention, it’s still far from clear what long-term impact the virus will have on markets.

Since the beginning of the year, the discount of the average investment company excluding VCTs has widened by 5.6 percentage points, moving from -3.8% at the end of December to -9.3% at the end of February. However, several investment company sector discounts have widened by more than this and the Association of Investment Companies (AIC) has published the top ten below.

Commodities & Natural Resources tops the list, with investors worried about the virus’s effect on global demand. Asia-focused sectors make up three of the top ten and growth-orientated sectors have been affected with discounts widening in the Private Equity, UK Smaller Companies and Technology & Media sectors.

However, not all sectors have seen their discounts widen. The average premium of Biotechnology & Healthcare has risen 1.5 percentage points this year, possibly reflecting the global demand for products to prevent or mitigate coronavirus. Financials saw its discount narrow by 2 percentage points.

Several major sectors have seen their discounts and premiums move by smaller amounts. The average premiums for Infrastructure and Renewable Energy Infrastructure have decreased by 2.1 and 3.9 percentage points respectively. UK All Companies and UK Equity Income saw their discounts widen by 3.2 and 4.4 percentage points and the average discount for the Global sector has widened by 6.6 percentage points.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “It’s been an alarming few weeks for investors with some significant market volatility. However, the data shows that the impact of coronavirus varies depending on the investment sector. Asia and growth-focused sectors have suffered, but changes in sentiment towards other areas such as infrastructure and UK blue chips has been more muted. Clearly, we don’t know what impact the virus will have on markets this year, but for investors with a long time horizon the wider discounts could represent value.

“While the impact of coronavirus is distressing and worrying, investors can take comfort from the fact that investment companies have survived two World Wars, the Great Depression, the bursting of the tech bubble and the Global Financial Crisis and continue to help investors meet their needs today.”

The 10 investment company sectors whose average discount has increased the most in 2020


AIC sector

Weighted average
discount at
31/12/2019 (%)

Weighted average
discount at
31/01/2020 (%)

Weighted average
discount at
28/02/2020 (%)

Discount change
from 31/12/2019
to 28/02/2020
(% points)


Average investment company (ex. VCTs)






Commodities & Natural Resources






Private Equity






Country Specialist: Asia Pacific ex Japan






Property - UK Commercial












UK Smaller Companies






Global Equity Income






Asia Pacific Income






Asia Pacific Smaller Companies






Technology & Media





Source: AIC/Morningstar. Discount cum fair.



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  1. Source for all data is AIC/Morningstar. Sector averages require a minimum of three constituent investment companies.
  2. 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.
  3. 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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