by Nick Britton
Nick Britton
It’s now almost half a year since the UK went into lockdown. What felt at first like a temporary solution to an unprecedented emergency has become the basis of a new way of living and working, for those of us still lucky enough to be living and working.
The optimism of August and early September, with Rishi Sunak’s eat-out-to-help-out scheme followed by the reopening of schools and some offices, has been replaced by the grim realisation that we can expect months more of restrictions, local lockdowns and things generally not returning to normal.
One moment that seemed to encapsulate this was the announcement that the distributors of the next Bond film had decided it was no time to release No Time to Die, swiftly followed by the sad news that Cineworld is powering down all its screens in the UK and the US.
As investors, we need to try and work out what all this means for the asset classes into which we put our money. Commercial property is one area that has very obviously been affected. While REITs have remained open for trading, unlike many of their open-ended counterparts, they face the same big questions about their underlying assets. This month’s Spotlight brings you the views of several of our property managers on the future of the office, what’s going to happen to unused space, and how their tenants are coping.
It’s well worth noting that Jason Baggaley, one of the managers quoted in that article, will be speaking at an online seminar run by Aberdeen Standard on Thursday 29 October. Jason is an engaging and interesting speaker on UK commercial property who really tells it how it is, so if you’re interested in this asset class (and why the closed-ended structure is a good way to access it) I’d strongly encourage you to register – details in our event listing below.
Turning from property to UK equities, many have been surprised over recent weeks by the trio of mooted new offerings from Sanford DeLand, Schroders and Tellworth. Although we hear that the last of these hasn't got off the ground, it is still extraordinary that an apparently unloved asset class is generating such intense interest – especially given the double-digit discounts in the UK All Companies and UK Smaller Companies sectors. Ian Cowie looks at the prospects for Brexit Britain in his latest column for Spotlight.
As we come to terms with the likelihood that Covid-19 will not be all over by Christmas, it might be good to have something to celebrate. We could even do it with a patriotic bottle of Chapel Down sparkling wine, offering some much needed backing to the British economy.
Source: AIC/Morningstar
That brings me neatly on to VCTs, which are celebrating their silver anniversary this year. VCTs have grown up fast, from a twinkle in the eye of Ken Clarke back in 1995 to an industry that manages £4.7 billion today, supports hundreds of fledgling UK businesses, and has helped to create (at a very conservative estimate) some 27,000 jobs. Spotlight has got the full story from VCT managers about where VCTs have come from and where they’re going next.
One asset class whose popularity appears undimmed by any uncertainty that Brexit and Covid-19 can throw at it is Renewable Energy Infrastructure. Trading at a robust premium of 17.1% – more than any other AIC sector – yet offering an attractive 5.2% yield, the sector’s pronounced UK tilt certainly doesn’t seem to be bothering investors. Faith Glasgow, in her debut article for Spotlight, examines the appeal of the sector, which seeks to generate attractive financial returns from assets helping us towards a lower-carbon future.
I hope you are finding life tolerable in these strange times. I can’t promise you tickets to the next Bond film or even a bottle of Chapel Down, but if there is any other way the AIC can help you, please do get in touch.
Nick Britton, Head of Intermediary Communications, AIC
Thursday 29 October 2020 | Closed-ended structures for property investments
Aberdeen Standard invites you and your colleagues to join them for an introduction to the world of investment trusts, with a particular focus on property. Jason Baggaley, Deputy Head of Real Estate Value Add Funds, will highlight the key features of investment trusts, including Real Estate Investment Trusts (REITs). He will also explore how closed-ended property funds could provide an interesting option for your clients’ portfolios. The online event will be held from 3pm to 4pm and you can register here.