Commodities trusts shine in AIC rankings

Investments in commodities and natural resources bounced back to make it the top performing investment trust sector in 2016, according to new figures from the Association of Investment Companies (AIC).

Commodities trusts shine in AIC rankings

Exposure to gold, precious metals and natural resources stood investment companies in good stead this year, with the Commodities and Natural Resources sector booming by 72% despite a number of political shocks.

It signals a major come back for the sector which previously saw falls in every year from 2011 to 2015, but this year sector-favourites BlackRock World Mining and Riverstone Energy ranked amongst the top performing AIC members.

Investment companies focussing their attentions overseas also performed well in 2016, with the second top performing sector, North America, up 34% and Global Emerging Markets and Global Equity Income both up 31%.

The Country Specialists: Asia Pacific sector also boomed, and was up 28%.

Annabel Brodie-Smith, communications director at the AIC, said: “Sectors that had a challenging time in 2015, like Commodities and Natural Resources and Global Emerging Markets, are this year’s ‘come back kids’, with some UK focussed sectors having a more difficult time given sterling’s weakness.”

The performance of the sectors throughout 2016 highlights the importance of a balanced portfolio and long-term view, Brodie-Smith added, as one year’s underperformers could be the following year’s winner.

She said: “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. Some investors might like to consider monthly investing to help smooth out some of the highs and lows in the price of shares.”

Despite the average investment company recording returns up by 12%, the result of June’s EU referendum has left UK sectors straggling behind with the UK Smaller Companies sector down 10% and UK All Companies down 4%.

It marks a change in fortunes for UK investments after a successful 2015 which saw the UK Smaller Companies sector outperformed the average investment company by 15% and UK All Companies beat the average by 12%.

The VCT sector was up by an average of 3% in 2016 with Artemi VCT, Downing TWO VCT and Ventus 2 VTC C all ranking as some of the top performing during the year with a rise of 30%, 26% and 20% respectively.

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