The past few weeks have been among the most volatile periods for markets in living memory, as investors continue to react to the covid-19 pandemic. The FTSE 100 and S&P 500 are down 27% and 13% respectively and the average investment company has fallen 16% over the last six weeks*. However, some investment company sectors have been less affected than others and several investment companies have delivered positive returns in spite of sharp market losses.
At the Association of Investment Companies we have assessed the ten sectors that have held up best since 31 January 2020 and the best-performing individual companies over the same period.
Renewable Energy Infrastructure has suffered the shallowest fall of 3.2%, followed by Debt – Direct Lending which is down 4.4% and Growth Capital which has lost 5.8%. Completing the top five are Hedge Funds and Infrastructure which have fallen 7.2% and 8.6% respectively.
It’s been an alarming few weeks for investors and all investment company sectors have suffered losses. Renewable Energy Infrastructure has been in strong demand for its high yields and the underlying assets of these investment companies such as wind farms, solar parks and energy storage have a lower correlation to the wider stock market. Other sectors that focus on alternative assets, such as infrastructure, hedge funds, and debt, have also suffered shallower losses than the market. Of the ten best-performing sectors, seven invest in alternative assets.
While the coronavirus outbreak is very worrying, investors can take comfort from the fact that investment companies have been around for over 150 years and survived two World Wars, the Great Depression and the global financial crisis. The current unpredictable market movements provide a stark reminder of the need to take a long-term view of your investments.
The top 10 performing investment company sectors since 31 January 2020
Rank AIC sector % share price total return
31/01/2020 – 13/03/2020
Average investment company (ex VCTs) -16.2
1 Renewable Energy Infrastructure -3.2
2 Debt – Direct Lending -4.4
3 Growth Capital -5.8
4 Hedge Funds -7.2
5 Infrastructure -8.6
6 Financials -10.0
7 Debt - Structured Finance -10.3
8 Biotechnology & Healthcare -10.3
9 Debt - Loans & Bonds -11.1
10 Asia Pacific -11.7
Top-performing AIC member investment companies
The top ten performers in the AIC member universe over the past six weeks come from a range of sectors.
BH Global and BH Macro each features twice in the list. Their US dollar share classes have delivered returns of 21.5% and 19.3% respectively in sterling terms; however, their pound-denominated share classes have also performed strongly, with returns of 9.2% and 7.9%.
The top 10 performing investment companies since 31 January 2020
Rank Investment Company AIC sector % share price total return
31/01/2020 – 13/03/2020
Average investment company (ex. VCTs) Peer group weighted average -16.2
1 BH Global USD Hedge Funds 21.5
2 BH Macro USD Hedge Funds 19.3
3 Schiehallion Growth Capital 10.9
4 Ashmore Global Opportunities GBP Global Emerging Markets 9.8
5 BH Global GBP Hedge Funds 9.2
6 Hadrian's Wall Secured Investments Debt - Direct Lending 8.4
7 BH Macro GBP Hedge Funds 7.9
8 Marble Point Loan Financing Debt - Structured Finance 5.7
9 US Solar Fund Renewable Energy Infrastructure 5.1
10 Aquila European Renewables Income Fund Renewable Energy Infrastructure 4.7
Source: AIC/Morningstar. Performance is share price total return in sterling terms.
*Source for all data is AIC/Morningstar. Sector averages are weighted averages and are not produced for sectors with fewer than three constituent investment companies. Data is from 31/01/2020 – 13/03/2020. Performance is in sterling terms.