Sterling fall pushes 60% investment trusts above pre-Brexit levels

Pound-Sterling-GBP-Money-Currency-Andrew-Michaels-700x450.jpgThe fall in the price of sterling coupled with the rise in some overseas markets has lead to almost 60 per cent of UK-listed investment trusts seeing price rises after the EU referendum.

Research from Stifel finds that of the 221 UK-listed investment trusts with a market cap of more than £100m, 129 have seen a price rise on their pre-Brexit levels.

“In most cases the circa 10 per cent depreciation of sterling against the US dollar has been a key contributor to NAV performance, together with some rises in overseas stock markets. The 14 per cent rise in the value of the Japanese Yen has also had a large impact on some funds,” says the report from Stifel.

The bulk of the investment trusts seeing the largest price rises have exposure to Asia, emerging markets, Japan or international equities.

BlackRock Latin American has seen the biggest price rise at 14.9 per cent between 23 June and 1 July, followed by JP Morgan Chinese at 14.4 per cent and Aberdeen EM Investment Company at 12.5 per cent.

Infrastructure-focused trusts have also seen price rises, with the sector rising by 3 per cent in price terms.

“Whilst the gains on the non-equity funds such as Infrastructure haven’t been within the largest 30 price rises, many of these alternatives have still performed well, with relatively low volatility,” the note says.

It adds that the sector is “benefiting from an expectation that interest rates will be ‘lower for longer’, attractive yields and some anticipation of stable to slightly lower discount rates”.

In the day after the EU referendum, across the UK all caps, UK smaller companies and UK equity income sectors, only the JP Morgan Elect Managed Income trust managed to avoid a loss on a price basis, according to FE data. The trust saw a 1.53 per cent price rise to close of market on the Friday after Brexit.

Stifel trust performance