Investment trust sectors get a shake-up

More than a dozen new investment trust sectors have been added by the Association of Investment Companies.

Funds and Investment Trusts May 9, 2019 by Tom Bailey

Over a dozen new investment trust sectors have been added by the Association of Investment Companies (AIC), following an industry consultation.

Fifteen sectors have also been renamed, with 31 sectors left unchanged. The changes will come into force on 28 May.

Largely driving the increase in new sectors has been the growth of trusts investing in alternative assets. According to the AIC, the last five years have seen a 92% increase in money invested in alternative asset investment trusts. The total figure now stands at £75.9 billion.

The growth of alternative asset investments can be see in the shake up given to both property and debt sectors.

Property Direct – UK and Property Specialist sectors being broken into new sectors: Property – UK Commercial, Property – UK Healthcare, Property – UK Residential and Property – Debt.

This follows the Investment Association (the industry body for open-ended funds) decision to also reclassify their property sector in June last year.

Also being broken up is Sector Specialist: Debt. The new sectors will be: Debt – Direct Lending, Debt – Loans & Bonds and Debt – Structured Finance.

Another new alternative asset sector is Royalties. As the name suggests this sector will cover trusts that invest in royalties. At present its only consitutent is Hipgnosis Songs trust.

Reflecting a growing interest in investing in unlisted assets, another new sector is Capital Growth. This sector will include investment trusts that have 80% of their assets in unlisted. As we have outlined in Money Observer before, more companies are delaying going public. This means retail investors potentially miss out on the early growth years of these companies. Investment trusts, however, offer investors a way to access unlisted shares.

Also added was the sector Technology & Media. This sector is a merger of Sector Specialist: Small Media, Comms & IT Cos.

The Asia Pacific sector has also seen changes. Previously, the region was divided over the inclusion of Japan, with Asia Pacific Japan and Asia Pacific ex Japan. The region is now covered by a wider range of sectors, with new sectors including Asia Pacific Income as well as Asia Pacific Smaller Companies.

Specialist sectors have also been renamed, with their prefix “sector specialist” removed. For example, Sector Specialist: Biotechnology & Healthcare has been renamed just Biotechnology & Healthcare.

Subscribe to Money Observer Magazine

Be the first to receive expert investment news and analysis of shares, funds, regions and strategies we expect to deliver top returns, plus free access to the digital issues on your desktop or via the Money Observer App.

Subscribe now

Add new comment