Mini-budget: Investment companies perfectly positioned to support growth drive

The Association of Investment Companies (AIC) has responded to the Chancellor’s mini-budget, which puts economic growth at the centre of government policy.

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “It is clear that increasing the growth rate of the UK economy is a mission that the government wants to take on. Any drive for growth needs to be backed by long-term capital and this is something that investment companies are perfectly positioned to provide.

Infrastructure

“The Chancellor has identified infrastructure as a key plank of this growth strategy. Investment companies manage £33 billion of infrastructure assets, including £18 billion in renewable energy infrastructure, and fundraising for these sectors has remained strong this year despite a more uncertain economic environment. Investment companies are well placed to accelerate development of UK infrastructure by providing permanent capital to projects critical for economic growth.

Pension charge cap

“However, defined contribution pension schemes have found it difficult to invest in infrastructure and other productive assets due to the pension charge cap. Removing well-designed performance fees from the cap is a measure that could help unlock further investment in these areas while providing diversification benefits to pension savers.

Tax incentives

“On the other side of the equation, it’s important that investors who put their capital at risk are rewarded. The Chancellor’s decision to reverse the 1.25 percentage point increase in dividend tax rates is designed to support entrepreneurs and investors to drive economic growth. Also welcome is the vote of confidence he has given to the VCT scheme, which he has committed to extend beyond 2025.

Deregulation

“As part of the Chancellor’s programme of regulatory reform, we would urge him once again to focus on consumer disclosures, in particular Key Information Documents (KIDs). We have long argued that these documents provide little help to consumers and even cause harm, as well as creating an uneven playing field between investment companies and open-ended funds. We continue to recommend the suspension of KIDs and the wholesale review of consumer disclosures that the Treasury has previously promised.”

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Notes to editors

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 vision is for closed-ended investment companies to be considered by every investor. The AIC has 357 members and the industry has total assets of approximately £269 billion.
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