AIC adds 13 sectors as alternative assets double

Royalties and UK Residential added in shake-up

The Association of Investment Companies (AIC) has revamped its investment company sectors in a move set to better compare “apples with apples” with debt and property among the asset classes seeing the biggest shake up.

In total, 13 sectors have been added to the existing 46 sectors of which 15 have been renamed. Additions include Asia Pacific Income, Royalties, and Debt – Structured Finance.

Willis Owen head of personal investing Adrian Lowcock said the AIC sectors tend to be more granular than the Investment Association. Lowcock said the breakdown of specialist funds into separate categories will help investors “compare apples with apples”.

The AIC has issued sector descriptions comparing its sectors with comparable sectors in the IA universe.

“While it is always a concern that too many categories could just confuse investors, I think the AIC have done a good job of making each category as self explanatory as possible,” Lowcock said.

Alternative assets double

The rise in alternatives held in investment trusts was a big driver in the sector shake-up, the AIC said in a press release. Assets in such funds has grown 92% over five years from £39.5bn in 2014 to £75.9bn in 2019.

The former debt sector has now been divided into direct lending, loans and bonds and structured finance. The UK and specialist property sectors have been divided into UK commercial, UK healthcare, UK residential and debt sectors.

Lowcock said the changes made sense and look at fundamental differences in the characteristics and risks of the various types of investments.

The changes follow a year-long consultation by the AIC independent statistics committee, which is made up of brokers, research analysts and data providers.

AIC chief executive Ian Sayers (pictured) said the changes better reflect the current shape of the industry.

Sayers said: “Recent years have seen significant growth in investment companies investing in alternative assets, such as property, debt and infrastructure and the emergence of new asset classes such as leasing and royalties. Our new sectors allow investors to find and compare companies with similar characteristics easily.”

New AIC sectors

New sectorSector description
Asia PacificInvests in the shares of larger quoted Asia Pacific companies.
Asia Pacific IncomeInvests in the shares of larger quoted Asia Pacific companies, or high yielding securities, for a high income.
Asia Pacific Smaller CompaniesInvests in the shares of smaller quoted Asia Pacific companies.
Debt – Direct LendingInvests in direct lending.
Debt – Loans & BondsInvests in general loans and bonds.
Debt – Structured FinanceInvests in structured finance.
Growth CapitalInvests in unquoted shares. Generally takes non-controlling stakes in early to maturing companies.
Property – DebtInvests in property debt.
Property – UK CommercialInvests in UK commercial property.
Property – UK HealthcareInvests in UK healthcare property.
Property – UK ResidentialInvests in UK residential property.
RoyaltiesInvests in royalties.
Technology & MediaInvests in technology and media.

 

Renamed AIC sectors

New sectorOld sector
Biotechnology & HealthcareSector Specialist: Biotechnology & Healthcare
Commodities & Natural ResourcesSector Specialist: Commodities & Natural Resources
Country Specialist: Asia Pacific ex JapanCountry Specialists: Asia Pacific
Country Specialist: Europe ex UKCountry Specialists: Europe
EnvironmentalSector Specialist: Environmental
FinancialsSector Specialist: Financials
Forestry & TimberSector Specialist: Forestry & Timber
InfrastructureSector Specialist: Infrastructure
Insurance & Reinsurance StrategiesSector Specialist: Insurance & Reinsurance Strategies
LeasingSector Specialist: Leasing
Liquidity FundsSector Specialist: Liquidity Funds
Property – EuropeProperty Direct – Europe
Property – Rest of WorldProperty Direct – Asia Pacific
Renewable Energy InfrastructureSector Specialist: Infrastructure – Renewable Energy
UtilitiesSector Specialist: Utilities

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