By Annabel Brodie-Smith
I hope 2020 is treating you well. I had a lovely long Christmas break with way too much food, long winter walks and lots of rest due to Father Christmas’s genius present, the Lego Death Star, which kept the boys busy for hours.
As we enter the 2020s, we are taking a look at the best performing investment company sectors of the last decade. Despite all the political and global worries, I’m pleased to say that a diverse spread of sectors performed strongly with the Biotechnology & Healthcare sector being the star performer up 491%. Defying Brexit uncertainty, two UK investment company sectors are in the decade’s top ten performers. Smaller companies have been storming, with three smaller company sectors in the top ten performers of the last ten years.
Following the Woodford fiasco, there’s been wider recognition of the suitability of the closed-ended investment company structure for hard-to-sell investments. In keeping with this theme, the Private Equity and Infrastructure sectors both delivered particularly strong returns over the 2010s. But it’s not all about alternatives: investors who have gained overseas equity exposure via the Japan, Global and North America sectors have been handsomely rewarded over the last decade.
Of course, there’s no guarantee that this strong performance will be repeated. Investors need to focus on their risk profile and meeting their investment needs, rather than chasing past returns. But it’s a good position to be in at the start of the decade.
UK investors have had plenty of festive cheer with the FTSE All Share up 19% in 2019. Investment company investors have had even more to celebrate, with the UK All Companies sector up 39% and the UK Smaller Companies sector up 38% last year. So it makes sense that investment expert Ian Cowie is delving into UK investment companies after “Clouds of political uncertainty, which had overshadowed British shares for several years, have begun to clear and the sun is shining on the London Stock Exchange again.” We’re also bringing you the views of Gary Moglione, Manager of Seneca Global Income & Growth Trust, who explains how this investment company offers diversification by investing a quarter of the portfolio in specialist investment companies. These range from specialist property investment companies such as Assura, which provides modern GP surgeries on long term leases, to Hipgnosis Songs Fund, which buys catalogues of songwriters’ rights, featuring work by artists such as Sister Sledge, the Kaiser Chiefs and Dave Stewart.
Finally, you may be interested in a new book which is a good read for investment company investors. It’s ‘The Investment Trust Handbook 2020’, edited by the much respected investment journalist Jonathan Davis. It includes fascinating chapters from investment gurus including managers Bruce Stout of Murray International, Ben Rogoff of Polar Capital Technology and Simon Edelsten of Mid Wynd, as well as a host of others including the AIC’s own Ian Sayers. Most importantly after Christmas, the ebook is free. Watch the interview with the editor Jonathan Davis on the left to find out more.
Hope you have a good start to the year.
Annabel Brodie-Smith Communications Director, AIC
Asset TV interview Jonathan Davis, Editor of the Investment Trusts Handbook
