Investment companies raised just £952m in the first half of 2023, a 76% decline from the £4bn raised in H1 of 2022.
According to the Association of Investment Companies (AIC), hedge fund BH Macro raised the most of any existing trust by pulling in £315m.
The Hedge Funds sector raised the most new cash with a total of £316m, followed by UK Equity Income with £147m. Dividend hero City of London Investment Trust was responsible for the bulk of this, pulling in £85m.
A challenging first half for investment companies saw the average trust return 0.3% to the end of June, while discounts widened to 14% from 12.3% at the start of the year.
See also: Emerging markets equities trust targets £100m IPO
Liquidation
So far, three investment companies have announced their closure in 2023 – Blue Planet Investment Trust, SME Credit Realisation Fund, and Abrdn Latin American Income.
Meanwhile, Abrdn Japan Investment Trust is in the process of merging with Nippon Active Value, with the latter being the surviving company.
Ashoka WhiteOak Emerging Markets Trust raised £30.5m at IPO in May, the only new launch on the main market so far this year.
This continues a drought in investment trust IPOs in recent times, with no new investment companies launched in 2022, while in 2021 there were 16 IPOs raised £3.76 billion.
Richard Stone, chief executive of the Association of Investment Companies (AIC), said: “In this testing half-year, investment company boards have been proactive and creative in looking for ways to deliver value for shareholders – whether that is through fee changes, mergers, manager changes or even proposing a wind-up of the company. Several strategic reviews are under way, pointing to the possibility of more corporate activity in the second half of the year.
“Investor sentiment has created a challenging backdrop for fundraising and driven discounts to unusually wide levels. Historically, times like these have often proven to be good times to buy, but we may see more volatility during the rest of 2023, especially if inflation remains high and interest rates continue to climb.”
