Investment trust launches see “sharp slowdown”

Ian-Sayers-700.pngInvestment trusts have seen a “sharp slowdown” in new launches this year, despite assets in the vehicles reaching record levels.

Ian Sayers, chief executive of the Association of Investment Companies, says that just one new investment trust has been launched so far this year, compared to nine or 10 in the same period last year.

He puts the lack of launches down to uncertainty ahead of and following the EU referendum, with asset managers not wanting to commit time and capital to new launches.

“Big fund launches cost money and take time. The Brexit uncertainty has affected IPOs, but not underlying demand. We saw a similar slowdown last year ahead of the general election,” he adds.

The lack of new launches may also be because many sectors are now trading on discounts, following market uncertainty after Brexit. Property discounts have widened “quite a lot”, says Sayers, adding that there are “pockets with tougher conditions, including private equity, which has seen discounts widen”.

“Some sectors that have moved to discounts need to move to a premium for new products to come to market,” he adds.

The AIC revealed last week that assets under management in investment trusts reached a record high of £141bn, with almost £9bn added since the end of January this year.

In particular, alternative assets such as property and infrastructure had seen an increase in assets, with £13.2bn now sitting in property trusts and £7.59bn in infrastructure trusts.

“There will still be a lot of demand for lots of products. Those areas that have seen lots of interest this year will remain in demand,” Sayers adds.