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Overseas smaller companies lead the way in 2017

14 December 2017

Best performing investment company sectors over the year-to-date revealed.

Political uncertainty has continued in 2017 with key elections across Europe and in Japan; Brexit negotiations, which led to the recent announcement of a Brexit deal; concern over rising inflation and the first interest rate rise in a decade.  

Over 2017 to the end November, overseas smaller companies sectors are leading the way with Japanese Smaller Companies the top performing sector, returning an impressive 47% and in second place is European Smaller Companies, up 44%. The Japan sector takes third place, up 34%, Country Specialists: Asia Pacific follows closely in fourth place, up 33% and UK Smaller Companies completes the top five, returning 27%.

It has been a good year for the closed-ended sector in share price total return terms, with the average investment company (ex VCTs) up 14% to the end of November 2017.

Top performing investment company sectors over year-to-date - % share price total return to 30 November 2017

AIC sector

YTD      

1 year

3 years

5 years

10 years

Overall weighted average ex VCTs

14.28

18.08

39.57

92.49

134.30

Japanese Smaller Companies

47.03

47.24

133.48

240.74

120.08

European Smaller Companies

43.77

51.42

107.22

220.00

205.53

Japan

33.65

34.75

94.46

206.82

187.31

Country Specialists: Asia Pacific

32.73

32.29

65.97

161.17

96.47

UK Smaller Companies

27.40

37.13

53.87

131.10

237.81

Europe

26.93

35.42

50.33

112.29

123.83

Global

23.84

29.41

60.25

134.16

161.79

Global Emerging Markets

23.28

26.09

32.35

47.14

90.30

Property Direct - Europe

22.92

23.80

96.21

149.16

155.89

Sector Specialist: Biotechnology & Healthcare

22.07

19.49

49.62

175.12

605.00

Source: Morningstar

VCTs

There has been a lot of demand for VCT shares so far in the 2017-18 tax year and in November the Treasury’s Patient Capital Review announced changes to the VCT investment rules. VCT performance over the year has been strong, up an average of 7% to the end of November 2017. This is up four percentage points (3%) on the same period in 2016.

The VCT AIM Quoted sector was the top performer of the year, up 18%, followed by the VCT Specialist: Environmental sector, which returned 6%.

Top performing VCT sectors over the year-to-date - % share price total return to 30 November 2017

AIC sector

YTD      

1 year

3 years

5 years

10 years

VCT weighted average

7.08

8.28

27.40

67.57

89.50

VCT AIM Quoted

17.83

21.34

47.60

114.56

82.51

VCT Specialist: Environmental

6.30

7.52

23.96

64.62

 

VCT Generalist

5.72

6.62

25.08

62.83

91.49

Source: Morningstar

Annabel Brodie-Smith, Communications Director, Association of Investment Companies said: “Investment companies have performed strongly in 2017 with the European and Japanese Smaller Companies sectors leading the way, having benefited from favourable election results. The overseas sectors have performed strongly due to healthy economic growth and sterling’s weakness. In contrast, Brexit uncertainty has been a headwind for the UK sectors.

“It’s interesting to look at the short-term winners but investors need to have a balanced portfolio and a long-term view. One year’s underperformers can be the next year’s star performers, 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. If investors have any concerns they should speak to a financial adviser.”

-Ends-

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Notes

  1. Data is to 30 November 2017 based on the last official close price at the month end, on a % share price total return basis. No expenses taken into account. Source: Morningstar. Discrete % annual returns - % share price total return

    AIC sector

    01/12/2012 - 30/11/2013

    01/12/2013 - 30/11/2014

    01/12/2014 - 30/11/2015

    01/12/2015 - 30/11/2016

    01/12/2016 - 30/11/2017

    Overall weighted average ex VCTs

    20.65

    9.75

    2.78

    13.99

    18.08

    VCT weighted average 16.22 8.03 7.95 5.91 8.28

    Japanese Smaller Companies

    53.69

    -3.69

    26.16

    25.81

    47.24

    European Smaller Companies

    58.24

    -3.55

    22.39

    9.91

    51.42

    Japan

    56.61

    1.37

    22.95

    17.96

    34.75

    Country Specialists: Asia Pacific

    15.83

    34.84

    -3.14

    32.24

    32.29

    UK Smaller Companies

    48.84

    1.61

    18.53

    -5.56

    37.13

    Europe

    32.76

    6.71

    9.98

    0.66

    35.42

    Global

    28.12

    13.96

    6.05

    17.01

    29.41

    Global Emerging Markets

    3.52

    7.08

    -18.79

    29.00

    26.09

    Property Direct - Europe

    20.84

    8.82

    20.11

    53.24

    23.80

    Sector Specialist: Biotechnology & Healthcare

    36.80

    37.07

    9.85

    14.56

    19.49

    VCT AIM Quoted

    30.63

    6.49

    12.95

    4.63

    21.34

    VCT Specialist: Environmental

    15.77

    12.17

    6.15

    8.52

    7.52

    VCT Generalist

    14.24

    8.59

    7.19

    6.81

    6.62

  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 347 members and the industry has total assets of approximately £171 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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Annabel Brodie-Smith
Communications Director
Tel: 020 7282 5580
annabel.brodie-smith@theaic.co.uk
@annabelbrodies
@aicpress

Laura Thomas
PR & Marketing Manager
Tel: 020 7282 5551
laura.thomas@theaic.co.uk
@aicpress

Elmley de la Cour
PR & Marketing Executive
Tel: 020 7282 5583
elmley.delacour@theaic.co.uk
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