It was a good year for the close-ended sector with returns up and the total amount of assets under management hitting a record £157.8bn, a 57% increase in just three and a half years.
While there had been some discount volatility throughout 2016, unsurprisingly widening to -7.3% after the vote for Brexit, it had lowered to -4.7% at the end of November, still two points higher than where it closed in 2015.
Ian Sayers, chief executive of the AIC, said: “2016 has been a year of change and the investment company sector has also seen its fair share of change from strategic reviews and policy changes, through to management group changes and a proposed merger. We’ve also seen a good number of companies announce changes to their charging structures, with ‘tiered’ charging structures becoming a key trend.
“Assets under management reached a new record high, boosted by the sector’s high exposure to overseas assets amid sterling’s weakness. And whilst new issue activity has been muted this year, share issuance on the secondary market has been strong, particularly amongst income focussed companies.”
Record levels of assets were put down to the sector’s overseas exposure and the fall in sterling despite a lack of new issues due to the uncertainty of the year.
Only four new companies joined the market this year, raising £630m, compared to 17 new issues raising £2.6bn in 2015.
Secondary issues performed much stronger and raised £3bn with investment companies investing in alternative assets with higher yields issuing the most shares such as Tritax Big Box who issued £550m worth of shares and Greencoat UK Wind who put out £247m worth out.
Sayers said a “good number of companies” announced changes to their charging structures and he also recognised a trend for companies to implement a tiered-approach to benefit shareholders, with some abolishing performance fees all together.
