Investment companies hit all-time record for assets despite dip in fundraising 

Financial data

Investment companies recovered from pandemic lows to hit a fresh all-time high in assets, totalling GBP221.4 billion at the end of November, according to data from the Association of Investment Companies (AIC).

Nevertheless, fundraising for existing investment companies fell to GBP5.7 billion over the year, which was 22 per cent lower than the previous year’s total of GBP7.3 billion. 

“Despite the disruption and uncertainty caused by Covid-19, 2020 has seen the continuation of long-running themes in the investment company industry: healthy asset growth, strong fundraising from existing companies and falling fees,” says Ian Sayers, the AIC’s chief executive.

Out of the year-to-date total, GBP1.3 billion was raised in the Renewable Energy Infrastructure sector, the highest-raising sector of the year.

“Investment companies in the Renewable Energy Infrastructure sector continue to be in high demand for their attractive yields and their ability to contribute to a greener future.”

The largest fundraising by individual company was by Hipgnosis Songs Fund, which raised GBP426 million for its royalties fund which includes songs by Mariah Carey, Fleetwood Mac, and Blondie. 

Greencoat UK Wind followed with a raise of GBP400 million in the Renewable Energy Infrastructure sector, and then Smithson raised GBP349 million in Global Smaller Companies sector.

There were also six IPOs of new investment companies, raising a total of GBP855 million.
Investment companies returned an average of 10.2 per cent in the year to date, with many also making their fee structures more attractive for shareholders such as lowering management fees, introducing tiered fees and removing performance fees.

“Boards have proactively worked on behalf of shareholders in the challenging environment of 2020 by negotiating lower fees for shareholders and proposing management group changes and mergers. An independent board is a crucial advantage of investment companies over other types of fund and it’s good to see them continuing to represent shareholders’ interests,” adds Sayers.

These included the removal of performance fees at New Star, European Opportunities, Worsley Investors, BMO Real Estate Investments, Vietnam Holding and Lowland. Tiered fees were also introduced at nine investment companies, including Aberdeen Asian Income, Edinburgh Investment, JPMorgan European, and Schroder UK Public Private.