Having just been through a year of unprecedented political upheaval that sent financial markets spinning, many investors will be assuming 2017 cannot possibly be so tumultuous.
The reality, however, may be less comforting: while Brexit, the US election, further instability in the eurozone and even Chinese government intervention in the debt and equity markets all shocked investors in 2016, this year we will start finding out what these surprises might mean.
Investment trust shareholders understand all too well that such macro events translate very readily into the micro. A strong performance from closed-ended funds in 2016 saw investment trusts outperform the market and many of their open-ended counterparts, but the aggregate numbers obscure the volatility investors had to put up with day-to-day.
In the immediate aftermath of June's EU referendum vote, for example, the average trust's share price slipped from a 4 per cent discount to the value of its assets to a 9 per cent discount.
Domestically focused smaller companies funds caught a cold on fears for the UK economy, while property funds plummeted amid worries that real estate investment would collapse.
Within months, however, the sector's international funds were enjoying a lift courtesy of a fall in the value of sterling, and discounts were shrinking once again - they were back below 4 per cent by the end of September.
Donald Trump's stunning victory in the US presidential election in November caused a similar topsy-turvy performance among closed-ended funds.
With markets suffering on fears that a Trump presidency will be characterised by a protectionist retreat from free trade, many investment trusts slipped back, with emerging market funds hit particularly hard.
Gold funds, on the other hand, soared as investors sought sanctuary in the precious metal, while infrastructure funds benefited from the president-elect's promise to spend big once in office.
Biotech and pharmaceutical funds also got a lift, since investors had feared a crackdown on drugs manufacturers by defeated Democrat candidate Hillary Clinton.
So, what happens after the storm? Well, look forward to a period of calm if you like, but don't be surprised if you're disappointed. Further storms are more likely.
Let's start with president Trump. 'Whilst the dust is starting to settle after the election, there remain many policy unknowns,' warns Iain Scouller, managing director of investment trust research at stockbroker Stifel.
'However, the market is taking a strong view on issues such as reflation, with implications for debt, infrastructure and renewables funds; healthcare, technology and emerging markets are also seeing continued consequences of the election result.'
POTENTIAL SERIOUS ADVERSE CONSEQUENCES
The reflation argument is that Trump's campaign promise to spend $1 trillion on infrastructure investment will provide a further lift to the US economy, which has already entered a period of strengthening, even with the US Federal Reserve moving into a phase of monetary policy tightening.
This is a theme that plays to the strengths of funds that hold cyclical and value stocks, as well as to funds that might get a direct benefit from infrastructure investment, even if this is a long-term phenomenon - it's worth noting that HICL Infrastructure, International Public Partnerships, BBGI and John Laing Infrastructure Finance all take stakes in US projects.
The biggest fear among investors right now is that the Trump anti-free trade campaign rhetoric heralds an era of US retreat into protectionism during his presidency.
'That could translate into actions that have serious adverse consequences for markets,' warns James Carthew, research director at QuotedData. Emerging markets are particularly vulnerable to those fears - and all the more so if the dollar strengthens on hopes of rising US interest rates.
One other US-related theme is worth considering here too. 'Since the result was announced, we have seen a sell-off in bonds and, consequently, a spike in government bond yields as yield curves have steepened, reflecting increased inflationary expectations,' warns Alan Brierley, a director of the investment companies team at stockbroker Canaccord Genuity.
That has potential implications across the investment company industry. Sectors ranging from debt finance to infrastructure have benefited in recent times from income-seeking investors' desperation to find better returns than what has been available from moribund fixed-income assets, despite requiring greater tolerance of risk.
Could these funds - shares in many of which trade on a premium to net asset value, such is their priority - see a pull-back if bond yields make a recovery?
BOND PROXIES' FATE
A related question is the fate of so-called 'bond proxies' - equities regarded as stable and income-generative, even in difficult times, and therefore as suitable replacements for bond holdings during periods of low yield.
Funds with large holdings of such stocks - think industries such as tobacco, food and drink, and utilities - are already beginning to suffer at the hands of this trend.
Closer to home, Charles Cade, head of investment companies research at stockbroker Numis Securities, warns that the twists and turns of the UK's progress towards Brexit will inevitably spill over into financial markets, difficult though they are to foresee.
'For UK investors, the weakness of sterling in 2016 was a key factor, boosting returns on overseas assets,' Cade adds. 'This seems unlikely to be repeated and there are numerous political and economic uncertainties which are likely to put pressure on corporate earnings and dividends.'
Where is the pain most likely to be felt? Well, Cade is concerned about the prospects for the UK equity income sector, which is a major investor in those bond proxies.
'Investment trusts are well placed to maintain dividend payouts due to their ability to utilise revenue reserves if necessary, but the shift upwards in yield curves [is already] leading to weak performance from many of the UK equity income funds.'
Cade is also worried that for 'UK smaller company funds, a recovery in 2017 is likely to require a pick-up in sentiment towards the UK domestic economy'.
And while post-Brexit UK economic performance has so far confounded the Remain campaign's predictions of disaster, sentiment remains poor.
Don't forget, either, that on the other side of the channel, 2017 is election year in both France and Germany, the driving forces of the eurozone.
Nervousness about the outcome of those elections may hold European funds back in advance of polling day, while any serious gains for anti-EU parties represent a significant risk.
At a macro level, then, the unknowns that lie ahead in almost every major market of the world may mitigate against gains from equity investments in 2017.
REAL ESTATE ATTRACTIONS
If so, one alternative asset class for returns that continue to outpace inflation might be real estate, with 'inflation-proofed returns from good quality tenants to remain attractive', according to wealth manager Killik's Mick Gilligan.
In that case, investment trusts represent an alluring way into the sector compared to open-ended vehicles.
'Investment trusts have, in general, continued to benefit from the advantages of the closed-ended fund structure as a result of their ability to deploy gearing and avoid being sellers to fund redemptions,' argues Simon Elliott, head of the research team at Winterflood Investment Trusts.
'This was best seen in the direct property sector in the aftermath of Brexit when closed-ended funds were not forced to consider disposals, unlike a number of their open-ended counterparts.'
Finally, it's worth considering looking beyond the big picture for other potential themes of the year ahead. In particular, the list of investment companies that have undergone some sort of corporate action continues to grow at an accelerating pace.
Share buyback programmes are one example, but in more dramatic cases we have seen managers replaced, trusts wound up and even some mergers and acquisitions activity in the sector.
As Numis's Cade points out, while it's difficult to see corporate actions coming in advance, wide discounts provide a clue as to where they might fall. 'Discounts are particularly wide among private equity, Asia excluding Japan and UK smaller companies trusts,' he points out.
Meanwhile, beyond changes occurring at existing investment trusts, what about new vehicles?
Volatile market conditions are not supportive of new issues and fundraisings fell sharply during 2016; it's difficult to see much of a recovery this year, particularly since new issuance has in recent times been heavily concentrated in those potentially vulnerable alternative income funds; but there will still be new launches and additional share issues.
Look out, in particular, for The People's Trust, where founder Daniel Godfrey raised £100,000 for the pre-launch process through a crowdfunding campaign in a matter of weeks before Christmas.
Godfrey, a former chief executive of both the Association of Investment Companies and the Investment Management Association, is promising a new approach to retail fund management, featuring greater shareholder representation and more socially responsible investment. Worthy aims, but the proof will be in the pudding.
WHERE IN THE WORLD FOR GROWTH?
Where should investors look for opportunities as they seek a way through the volatility in 2017? Cade says a good place to start for growth-oriented investors is Edinburgh Worldwide.
'[The trust] invests in high-growth smaller companies on a global basis,' Cade points out. 'We rate manager Douglas Brodie highly and the trust offers value on a discount of over 10 per cent, whereas sister trust Scottish Mortgage is trading at a premium.'
For investors prepared to take more risk, Cade suggests several specialist vehicles. 'I like many of the listed private equity funds - particularly HgCapital Trust or HarbourVest Global Private Equity,' he says.
'A more speculative recommendation would be Riverstone Energy, which has a portfolio of oil and gas projects, principally in low-cost basins in the mid-US and western Canada.
'The shares have recovered strongly in 2016, but we see further upside, with most of the fund's capital having been invested during [a period of] weak oil prices, enabling it to take advantage of industry distress.'
At Canaccord Genuity, meanwhile, Alan Brierley likes the look of Monks, which has seen a strong recovery since a shake-up in its management in March 2015.
'The manager has a clear investment philosophy with a bias toward quality and growth,' Brierley says. 'At the core of this is active management, with stock selection driving portfolio construction.'
SUGGESTIONS FOR INCOME-SEEKERS
With UK company dividends under pressure, James Carthew of QuotedData thinks that income-seeking investors should look further afield. 'International equity income funds, such as Securities Trust of Scotland, have a wider pool of investments to choose from,' he points out.
Cade's income-focused pick also has an international flavour. 'Schroder Oriental Income has a strong track record through a bottom-up approach and exposure to domestic growth in Asia,' he explains.
'The fund yields 3.7 per cent, and has delivered consistent dividend growth over the past decade, with a compound growth rate of 5.7 per cent a year.'
'International Biotechnology Trust, with a 4 per cent yield expected in 2017, and Ground Rents Income, offering good-quality inflation-proofed income.'
Finally, there will be some investors who are anxious to play it safe given the prospect of volatility.
Seneca Income & Growth is another potentially good option in this camp, adds Carthew.
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