Closed-ended investment company assets reach record high despite “challenging” 2016
Total assets under management (AUM) in closed-end UK investment companies, including trusts, reached a record high of £141bn at the end of June, according to new figures.
The Association of Investment Companies (AIC) today reported that nearly £5bn of assets were added to the total during June.
As well as being up from £134bn in June 2015, the amount is almost double the total recorded by the AIC at the end of June 2006.
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The global sector was the largest area of investment at the end of last month, with total AUM of £22bn.
The property sector was the next largest, with £13bn in assets. Private equity also has AUM of £13bn, while the UK equity income sector was the fourth largest, with £10bn.
“Although it has been a challenging start to the year, it is reassuring to see industry total assets standing at an all-time high,” said Ian Sayers, chief executive of the AIC.
He told City PM it had been a difficult year for several reasons, including stock market troubles, uncertainty around Brexit and fewer companies entering the sector through initial public offerings (IPOs).
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Sayers added: “The rise of ‘alternative assets’, such as property and infrastructure illustrates not just the demand for yield, but also the suitability of the closed-ended structure when it comes to investing in illiquid assets.
“This structure, which allows managers to take a long-term view without having to deal with the problems of large scale redemptions, also means that the sector is well-placed to weather any challenges that lie ahead.”