April 21, 2024

Demand for investment trusts down in ‘challenging’ 2023

The purchase of investment trusts on adviser platforms dropped by almost a third (28%) year-on-year to £948m in 2023.

This is according to data compiled for the Association of Investment Companies (AIC) by ISS Financial Clarity.

Additionally, all products purchased on adviser platforms dropped by 3% in 2023 from £184.9bn to £179.2bn.

Net demand for investment trusts on adviser platforms in 2023 was negative for the first time since records began in 2011.

In contrast during 2022, net demand was positive and at an all-time high of £474m.

Global came top and was the most purchased investment trust sector in 2023, as it accounted for 11% of all purchases.

Flexible Investment came in second, with the third most purchased sector in 2023 being Infrastructure, followed by UK Equity Income and UK Smaller Companies.

AIC research director Nick Britton said: “Last year was challenging for investment trusts with the average discount reaching its widest level since the financial crisis.

“Our data shows there was both a lower volume of purchases on adviser platforms, and more selling, compared to the previous year – resulting in the first year of negative net demand we have seen since 2011.

“Within this broader picture, some sectors saw positive net demand, such as Renewable Energy Infrastructure, UK Smaller Companies and Global Equity Income.

“More than 1,700 firms were active buyers of investment trusts on adviser platforms during the year – more than double the number of buyers 10 years ago.”

In January 2024 however, Interactive Investor said investment trusts are “making a comeback”.

The UK’s second-largest investment platform for private investors said both investment trusts and exchange-traded funds (ETFs) had witnessed a “robust upswing” [since November]”.

Interactive Investor deputy collectives editor Sam Benstead added that 70 funds, ETFs and investment trusts are up by more than 20%, according to data from FE Analytics from 1 November to 4 January 2024.

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