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Investment company 2021 review: a record year

Record fundraising for investment companies in 2021 helped propel the industry to its highest ever level of assets under management, data from the Association of Investment Companies reveals.

Far exceeding the previous fundraising record, £14.8 billion of new money has been raised for investment companies in the year to date, including £3.8 billion in 16 IPOs, most recently ThomasLloyd Energy Impact Trust whose shares were admitted to trading today.

The previous record was set in 2014 when £10.2 billion was raised.

The £11.1 billion raised by existing investment companies in so-called secondary fundraising was also a record, the previous high being £7.4 billion in 2019.

Fundraising was led by investment companies in the Renewable Energy Infrastructure sector which raised £3.4 billion between them, including £874 million in six IPOs. This was followed by the Infrastructure and Growth Capital sectors, which raised totals of £2.1 billion and £2.0 billion respectively.

Industry assets stood at £277.6 billion at the end of November, an all-time high.

2021 was a year of investment company mergers with five deals completed, the same as the number of mergers in the previous five years (between 2016 and 2020 inclusive), and the most mergers in a year since AIC records begin. A sixth merger has been approved by shareholders of Scottish Investment Trust with JPMorgan Global Growth and Income.

Five changes of management group also became effective during the year, with two more announced.

Boards were active in negotiating fee reductions on shareholders’ behalf. A total of 31 investment companies made fee changes to benefit shareholders.

The average investment company generated a share price total return of 14.7% between 1 January and 10 December. The Property – UK Logistics sector performed best over this period with a 45.0% return.

Richard Stone (pictured), Chief Executive of the Association of Investment Companies (AIC), said: “It has been an enormously busy year for investment companies, most notably on the fundraising front, with a record £14 billion raised, but also for mergers, management group changes and fee reductions.

“While strong fundraising is a vote of confidence in the investment company structure, especially for investing in less liquid assets such as green infrastructure and growth capital, fee reductions and manager changes are welcome signs of boards exerting their independence to make sure shareholders are getting the best deal.

“The record number of mergers this year suggests that investment company boards are also responding to investor demand for larger, more liquid investment companies that can deliver the benefit of economies of scale to shareholders.”

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