Investment trusts are thriving, driven in large part due to rising demand for fixed income alternatives.
Assets in investment trusts have hit an all time high thanks in part to a huge swathe of secondary issuance in closed-ended funds’ shares.
In the first half of 2017, the most poplar area of the investment trust market was Infrastructure - in terms secondary issuance - raising £1.2bn. This was followed by Alternative Credit at £514m. Funding Circle SME Income raised the largest total in the sector securing £142m via its C share issue, followed by Honeycomb Investment Trust (£105m).
Industry assets reached an all-time high of £167.9bn at the end of May 2017. Secondary issuance by AIC members reached £3.3bn, a record level over a half-year period and a significant increase compared to £1.8bn over the same period last year.
Ian Sayers, Chief Executive of the Association of Investment Companies, said: “It has been a strong first half of the year for the investment company sector, with assets reaching an all-time high.”
“Secondary issuance reached a record level and the number of new launches has picked up demonstrating substantial demand for investment companies. It’s interesting to note that much of the issuance, both new and secondary, took place in high-yielding, alternative asset classes such as debt, property and infrastructure.“
“This reflects the suitability of the closed-ended structure for investing in these types of illiquid assets and continued investor demand for income. “