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Investment companies have continued to cut fees in the first half of 2020 according to new data from the Association of Investment Companies (AIC). Eighteen investment companies brought in changes such as lowering management fees, abolishing performance fees and introducing tiered fees.

Despite the impact of COVID-19, £2.27bn was raised by existing investment companies. Whilst lower than H1 2019, which saw a record £4.0bn of secondary fundraising, this was slightly ahead of the same period in 2018 when £2.25bn was raised.

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Investment companies in the Renewable Energy Infrastructure sector led the way raising £352m. They were followed by Infrastructure (£317m) and Property – UK Commercial (£290m).

The largest individual fundraisings were completed by Sequoia Economic Infrastructure Income in the Infrastructure sector (£300m) and Supermarket Income REIT (£140m) and Urban Logistics REIT (£137m) from Property – UK Commercial.

The first half of the year saw one new investment company launch, Nippon Active Value Fund in the Japanese Smaller Companies sector, raising £103m in February.

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At the end of June the average investment company discount was 8% and industry assets were £201.7bn, a new all-time high, reflecting the strong recovery from the coronavirus market falls.

Ian Sayers, Chief Executive of the Association of Investment Companies (AIC), said:

“Despite the challenges of COVID, the first half of 2020 saw the continuation of themes which have been prevalent in recent years. There was further strong fundraising by existing investment companies, particularly those investing in income-generating alternative assets where the investment company structure is so well suited. Investment companies continued to lower charges, with a further 18 changing their fees to benefit shareholders. It’s encouraging to see investment company boards continuing to negotiate lower costs, particularly during the difficult times of the past few months.”

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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