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18 March 2020

Which investment company sectors have held up best?

The past few weeks have been among the most volatile periods for markets in living memory, as investors continue to react to the COVID-19 pandemic. The FTSE 100 and S&P 500 are down 27% and 13% respectively and the average investment company has fallen 16% over the last six weeks*. However, some investment company sectors have been less affected than others.

The Association of Investment Companies (AIC) has published the ten sectors that have held up best since 31 January 2020.

Renewable Energy Infrastructure has suffered the shallowest fall of 3.2%, followed by Debt – Direct Lending which is down 4.4% and Growth Capital which has lost 5.8%. Completing the top five are Hedge Funds and Infrastructure which have fallen 7.2% and 8.6% respectively.

Of the ten best-performing sectors, seven invest in alternative assets.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “It’s been an alarming few weeks for investors and all investment company sectors have suffered losses. Renewable Energy Infrastructure has held up the best during the market downturn. The sector has been in strong demand for its high yields and the underlying assets of these investment companies such as wind farms, solar parks and energy storage have a lower correlation to the wider stock market. Other sectors that focus on alternative assets, such as infrastructure, hedge funds, and debt, have also suffered shallower losses than the market.

“While the coronavirus outbreak is very worrying, investors can take comfort from the fact that investment companies have been around for over 150 years and survived two World Wars, the Great Depression and the global financial crisis. The current unpredictable market movements provide a stark reminder of the need to take a long-term view of your investments.”

The top 10 performing investment company sectors since 31 January 2020

Rank

AIC sector

% share price total return

31/01/2020 – 13/03/2020

 

Average investment company (ex. VCTs)

-16.2

1

Renewable Energy Infrastructure

-3.2

2

Debt – Direct Lending

-4.4

3

Growth Capital

-5.8

4

Hedge Funds

-7.2

5

Infrastructure

-8.6

6

Financials

-10.0

7

Debt – Structured Finance

-10.3

8

Biotechnology & Healthcare

-10.3

9

Debt – Loans & Bonds

-11.1

10

Asia Pacific

-11.7

Source: AIC/Morningstar.

-Ends-

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Notes

  1. *Source for all data is AIC/Morningstar. Sector averages are weighted averages and are not produced for sectors with fewer than three constituent investment companies. Data is from 31/01/2020 – 13/03/2020. Performance is in sterling terms.
  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 362 members and the industry has total assets of approximately £196 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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