Investment trust purchases at record £700m in H1

Baillie Gifford HQ in Edinburgh

Purchases of investment trusts on adviser platforms for first half of 2022 hit £700 million, the highest ever for a six-month period, according to data released by the Association of Investment Companies (AIC) and compiled by ISS Financial Clarity.

Purchases of investment companies on adviser platforms totalled £361 million in the second quarter of 2022, 20% higher than in Q2 of 2021 and the second-highest quarterly figure on record.

This was matched by strong net demand of £151 million, which was also the second-highest figure ever recorded.

The AIC has 358 member investment firms and the investment trust industry has total assets of £267 billion.

“Despite the market falls in the first half of the year, there were purchases of £700m between January and June, the highest level of purchases ever in a six-month period,” said the AIC.

“Reflecting the market turbulence, the Flexible Investment sector was particularly popular.

“This sector, which is home to investment companies that can invest in a range of different asset classes, accounted for 17% of purchases, more than any other AIC sector.

“The Global sector, which had occupied the top spot for purchases during the previous 20 quarters (five years) fell to second place in Q2 with 13% of purchases.

“Also popular in the quarter were UK Smaller Companies, with 7% of purchases, Property – UK Commercial (6%), UK Equity Income (5%) and Infrastructure (5%).”

Nick Britton, Head of Intermediary Communications at the Association of Investment Companies (AIC), said: “The healthy level of demand for investment companies during some difficult months in the market shows that advisers and wealth managers are taking a long-term perspective.

“Historically, market downturns have been great times to buy investment companies, though that’s not to say things won’t get worse before they get better.

“It’s noteworthy that the Flexible Investment sector proved so popular last quarter.

“This sector contains investment companies that can invest in a range of assets, including a few well known ‘capital preservation’ mandates.

“It doesn’t take too much imagination to guess why these might have been popular this year.

“On the other hand, a strong showing for sectors trading on wider-than-usual discounts, such as UK Smaller Companies, suggests that some buyers may have been shopping for bargains.”

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Mark McSherry
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