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Investment company activity in H1 2017

13 July 2017

Secondary issuance reaches a record level, IPOs increase ten-fold and assets hit an all-time high.

The investment company sector has experienced a strong first half of 2017. Industry assets reached an all-time high of £167.9bn at the end of May 2017. Secondary issuance by AIC members reached £3.3bn, a record level over a half-year period and a significant increase compared to £1.8bn over the same period last year. The six months to the end of June saw a significant increase in new investment company launches with 10 Initial Public Offerings (IPOs) in the first half of 2017 raising £1.5bn, in comparison to just one new launch in the same period last year. A total of 19 investment companies reduced their fees over H1 and five companies introduced a tiered management fee.

Ian Sayers, Chief Executive of the Association of Investment Companies, said: “It has been a strong first half of the year for the investment company sector, with assets reaching an all-time high. Secondary issuance reached a record level and the number of new launches has picked up demonstrating substantial demand for investment companies. It’s interesting to note that much of the issuance, both new and secondary, took place in high-yielding, alternative asset classes such as debt, property and infrastructure.  This reflects the suitability of the closed-ended structure for investing in these types of illiquid assets and continued investor demand for income. 

“It is good to see investment companies’ independent boards acting in the interest of shareholders by amending fees to benefit shareholders.  It is particularly interesting that more investment companies are negotiating tiered management fees. With a tiered fee, the percentage shareholders pay reduces as the investment company increases in size, enabling them to benefit from economies of scale.”

Secondary issuance: specialist sectors

In H1 2017, Sector Specialist: Infrastructure was the leader in secondary issuance raising £1.2bn. This was followed by Sector Specialist: Debt (£514m), Property Specialist (£457m) and Sector Specialist: Infrastructure Renewable Energy (£371m).

Of the £1.2bn raised by Sector Specialist: Infrastructure, almost one half was secured by HICL Infrastructure which raised £528m through two share issues. This was the largest amount of secondary issuance by an investment company over the period. In Sector Specialist: Infrastructure, HICL Infrastructure was followed by International Public Partnerships (£330m), Sequoia Economic Infrastructure Income (£160m) and John Laing Infrastructure (£119m).

In the Property Specialist sector Tritax Big Box REIT raised the highest total with £350m. Funding Circle SME Income raised the largest total in the Sector Specialist: Debt sector securing £142m via its C share issue, followed by Honeycomb Investment Trust (£105m).

New launches

H1 2017 saw 10 investment company IPOs raising £1.5bn, a dramatic increase on one IPO which raised £80m during the first six months of last year.



Management group

AIC sector

Assets (£m)



TOC Property Backed Lending

Tier One Capital

Sector Specialist: Debt





LJ Capital

Property Direct - UK




BioPharma Credit

Pharmakon Advisors

Sector Specialist: Debt




Impact Healthcare REIT

Impact Health Partners

Property Specialist




EJF Investments

EJF Investment Manager

Sector Specialist: Financials




Downing Strategic Micro-Cap


UK Smaller Companies




Jupiter Emerging & Frontier Income

Jupiter Unit Trust Managers

Global Emerging Markets





Sigma Capital

Property Direct - UK




AEW UK Long Lease REIT

AEW UK Investment Management

Property Specialist





Stewart Investors

Global Smaller Companies




Investment companies continued to reduce their charges over the first half of the year. A total of 19 AIC members implemented changes to their fee structure. This is more than double H1 2016 where nine companies changed their fees.  Over the H1 2017 period, four investment companies removed their performance fee (39 companies have removed performance fees since the implementation of the Retail Distribution Review at the beginning of 2013), and five introduced a tiered management fee (29 companies have introduced a tiered management fee since 2013).

Investment companies which removed performance fees


AIC sector

Date performance fee removed

BlackRock Latin American

Latin America

1 January

F&C Commercial Property

Property Direct - UK

1 January

Aberdeen Frontier Markets

Global Emerging Markets

14 March

Perpetual Income & Growth

UK Equity Income

1 April

Investment companies which introduced a tiered management fee


AIC sector

New tiered fee

Former fee

Date tiered fee introduced

JPMorgan Japan Smaller Companies

Japanese Smaller Companies

1.0% p.a. on the first £150m of net assets and 0.80% on any net assets in excess of £150m.

1.0% p.a. of gross assets.

1 January

F&C Commercial Property

Property Direct - UK

0.55% p.a. of the group’s gross assets, reduced to 0.525% on assets between £1.5bn and £2bn, and 0.5% on assets in excess of £2bn.

0.50% p.a. of the group’s net assets and reduced to 0.25% p.a. on cash net of gearing in excess of 5% of net assets.

1 January

JPMorgan European Smaller Companies

European Smaller Companies

1.0% p.a. on the first £400m of net assets and 0.85% on any excess.

1.0% p.a. of net assets.

1 April

Scottish Mortgage


0.3% p.a. on the first £4bn of total assets under management and 0.25% on assets in excess of £4bn.  

0.3% p.a. of assets under management.

1 April



0.45% p.a. on the first £750m of total assets and 0.33% on assets in excess of £750m.

0.45% p.a. of total assets.

1 May

Policy changes

In February, Alliance Trust shareholders approved proposals to adopt a multi-manager investment approach. Alliance Trust appointed Willis Towers Watson as overall equity manager who, on Alliance Trust’s behalf, have selected eight managers to run the investment company’s portfolio.

In March, Aberdeen Frontier Markets announced changes to its investment policy which will enable the investment company to make direct equity investments. Previously, the company operated as a fund of funds with an objective to generate long-term capital growth for its shareholders through investment in frontier markets. The new investment policy moves away from this approach and allows direct investment in companies listed in, or operating in, frontier markets.

Mergers and rollovers

Following shareholder approval on 6 April, Aberdeen UK Tracker merged with Aberdeen Diversified Income and Growth (formerly BlackRock Income Strategies), with Aberdeen Diversified Income and Growth acquiring £142m of Aberdeen UK Tracker's total assets.  The policy of the company also changed, allowing it to target a multi-asset approach. The approach aims to create greater capital stability for the company by generating long-term income and capital returns.

The period also saw two investment company rollovers. March 2017 marked the end of M&G High Income's fixed lifetime of 20 years. Consequently £14m was rolled over to JPMorgan Managed Elect and the new shares commenced dealing on 17 March. Similarly, following the voluntary winding up of Threadneedle UK Select on 28 June, £29m rolled over to Henderson High Income and the new shares commenced dealing on 29 June. 


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  1. 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 349 members and the industry has total assets of approximately £167 billion.
  2. 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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