How investment trusts did in 2016

The Association of Investment Companies (AIC), the industry body representing the interests of investment trusts and companies, has published its 2016 annual review of the sector.

According to the AIC, with the average investment company’s share price total return up 12%, and an average discount of -4.7% at the end of November, 2016 was a good year.

There was some discount volatility along the way, though. The end of June saw the average investment company discount widen briefly to -7.3%—its widest in three and a half years—no doubt related to the EU referendum Brexit result.

Investment trusts also reached a new record for total assets under management, which hit £157.8bn at the end of October – rising by 57% in just over three and a half years and indicating trusts’ growing popularity with investors.


The rise in investment trusts’ total assets was boosted by their large overseas exposure and the fall in sterling. Not surprisingly, given all the uncertainty 2016 brought, new issue activity was muted, with just four investment companies coming to market, raising £630m. This compares to the 17 new issues in 2015, which raised £2.6bn.

Secondary issues

The amount raised by existing companies issuing new shares in 2016 (the secondary market) was far more at £3bn – in line with last year. Trusts investing in alternative assets with higher yields continued to issue the most new shares. Taking into account both inflows and outflows, the sector saw net fundraising of £0.7bn.


The number of companies announcing changes to their charging structure continued apace in 2016. A particular trend this year was the number of companies introducing a ‘tiered approach’, or altering their tiered approach to benefit shareholders. Shareholders benefit from a tiered approach as the percentage they pay reduces as the investment company increases in size, capturing some of the economies of scale. Some further six investment companies announced they were abolishing their performance fees.

The views of the author and any people interviewed are their own and do not constitute financial advice. However the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Before you make any investment decision make sure you’re comfortable and fully understand the risks. If you invest in fund or trust make sure you know what specific risks they’re exposed to. Past performance is not a reliable guide to future returns. Remember all investments can fall in value as well as rise, so you could make a loss.