By Annabel Brodie-Smith
May has arrived with a bonanza of bank holidays!
We celebrated May Day in Oxford at an extraordinary ceremony dating back over 500 years. The Magdalen College School choristers and Magdalen College choir welcomed spring by singing Hymnus Eucharisticus from the top of Magdalen Tower at 6am.
It was magical to see thousands of people, many who had been up all night, going completely silent when the choir began to sing. My youngest son Fabian who is at school with the choristers was so pleased to be there supporting his friends. And afterwards the bells ring out a celebratory chime for 20 minutes – all a delight to see and hear.
And now it’s on to the next celebration, the Coronation of King Charles III. This month we have got out the history books to discover that there are 36 investment companies that have been in existence since King Charles was born, over 74 years ago.
"This month we have got out the history books to discover that there are 36 investment companies that have been in existence since King Charles was born, over 74 years ago.”
The extraordinary longevity of investment companies is highlighted by the 150th anniversaries of Dunedin Income Growth and Scottish American (often referred to as SAINTS) which fell in February and March this year. And Murray Income is due to celebrate its centenary in June.
When you look at these companies’ performance it’s understandable why investment companies have endured. Over 30 years, the longest period for which we have performance data, the average annualised return across these 36 companies is just below 9%.
But this long-term performance data also shows how easy it is to get caught up in the here and now. Would you have guessed that the best performer of this group over 30 years invests in property shares? Perhaps not, but TR Property Investment Trust is the top performer of the 36 companies and a £1,000 investment 30 years ago would now be worth over £35,000. No wonder historian John Newlands describes investment companies as “unquestionably the jewel in our financial crown”.
Continuing the Coronation theme, I’m sure King Charles would have plenty to say about the daunting prospect of taking over from a much respected predecessor. So we thought we’d ask investment company managers who have recently taken the reins what they had learnt from their predecessor and how they’d found the transition.
Mike Seidenberg took over as lead manager from Walter Price at Allianz Technology Trust in July 2022, having worked with Walter for 12 years. He says, “I think of myself as a torch bearer who will continue to improve on and refine our investment process, which is something we are always looking to do. Our personalities are different, I am much more likely to ‘walk the halls’ with the team, but our love for technology is the same.”
Dan Nickols took over as manager of Rights and Issues Investment Trust in October 2022 alongside co-manager Matthew Cable. Dan says, “My predecessor, Simon Knott, had a highly successful 38-year tenure, building a trust with strong heritage and robust principles at its core. Our approach to taking over the trust has been to retain the best of this heritage, combining it with the benefits of a large, well-resourced investment team and market leading investment platform.”
This month Ian Cowie is whole-heartedly embracing the future by examining the opportunities presented by AI and the investment companies which are investing in shares that might benefit from this new technology. Ian quotes Bill Gates, the co-founder of Microsoft, who says, “It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.”
Of course, the development of AI is not without its critics. Only this week the ‘godfather of AI’ Geoffrey Hinton quit his job at Google so he could warn us about the technology’s dangers. Whereas the historian Yuval Noah Harari told a science conference that AI systems were capable of using language to shape human culture. It’s early days – perhaps I will soon be replaced by ChatGPT – but there are clearly investment opportunities.
As Ian concludes, “Now the accelerating pace of AI means a wide range of digital goods and services seem set to experience their own ‘iPhone moment’ – or a step change in capabilities and consumer expectations. Nobody knows how this will turn out but investment companies enable everyone to minimise our exposure to the risks and maximise potential rewards.”
Finally, we are continuing with our regular ‘Focus on…’ feature, which aims to help you get the most out of our website theaic.co.uk when researching or monitoring investment companies. This month we are looking at the ‘Research’ tab on an investment company’s profile page, which brings together third-party analysis, articles, videos and news about each individual investment company.
For those of you who are interested in the currently out-of-favour real estate investment trusts (REITs) and property investment company sectors, QuotedData is running a property conference on 18 May from 9am to 4.45pm. The event is free for Compass readers to attend online with the discount code AICPICV23. There are a number of investment company managers speaking and it should be an interesting day.
I’d like to wish you all a wonderful Coronation weekend. Our village party is on Monday and we are providing Pimm’s and strawberry cupcakes – a very British combination!
Annabel Brodie-SmithCommunications Director, AIC
