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QuotedData’s Investment Companies Quarterly Review – First Quarter 2021

Investment Companies Quarterly Roundup

Kindly sponsored by Baillie Gifford and Aberdeen Standard Investments

£2.9bn of net new capital raised

It felt as though the rotation from ‘growth’ to ‘value’ that began last November picked up momentum towards the end of the first quarter. UK equity and property assets had a strong start to the year. Some of last year’s winning sectors, like technology, China equity funds, Japan equity funds, and healthcare, largely took a backseat.

Discounts widened slightly over the first quarter, though a median level of 7.2% at 31 March was significantly narrower than the 12.5% discount level last September. Several UK-focused sectors narrowed, as did private equity.

Discounts have narrowed considerably across the UK smaller companies sector in the wake of the UK’s strong vaccine rollout and the Brexit deal.

In this issue

Performance data – UK assets (including the pound)  benefitted from the fast-paced vaccine rollout and a final decision on Brexit. Elsewhere, a weaker dollar and resurgent Chinese demand for raw materials pushed up commodity prices. Technology gave back some of its gains while Chinese stocks also slipped as the government dialled back stimulus.

Major news stories – Cordiant Digital Infrastructure and Digital 9 Infrastructure’s IPOs raised a combined £670m. It was announced that Scottish Mortgage’s manager James Anderson was retiring. JLEN Environmental expanded its remit. Strategic Equity Capital scored a comfortable win in its continuation vote. HgCapital Trust had a bumper year. BlackRock World Mining had a great 2020.

Money in and out – The 325 investment companies raised £2.9bn of net new capital over the first quarter, with the IPOs of Cordiant Digital Infrastructure, Digital 9 Infrastructure, and VH Global Sustainable Energy Opportunities bringing in a combined £917m.

Research published over Q1 2021

Over the quarter, we published notes on Aberdeen New DawnVietnam Holding, Jupiter US Smaller CompaniesNorth American Income Trust, Weiss Korea Opportunity Fund, Aberdeen Emerging Markets, Polar Capital Global Financials Trust, JLEN Environmental Assets, BB Biotech, Grit Real Estate Income Group, Shires Income, Strategic Equity Capital, and Pacific HorizonAberdeen Emerging Markets Investment Company – Cautiously optimistic


Out of a total of 325 investment companies (we excluded funds with market caps below £15m), the median total NAV return over the first quarter of 2021 was 2.1% (the median total share price return was 3.0%). We note that the Association of Investment Companies (AIC) made some changes to its sector classifications during the quarter, headlined by the introduction of China/Greater China, India and Property – UK Logistics as separate sectors.

Best and worst performing sectors over Q1 2021

UK assets (including the pound) benefitted from the fast-paced vaccine rollout and a final decision on Brexit. Elsewhere, a weaker dollar and resurgent Chinese demand for raw materials pushed up commodity prices. The North American smaller companies sector fared well too, with cyclical sectors such as financials coming back strongly as attention turned to the looming recovery.

Coming off a stellar 2020, technology gave back some of its gains while Chinese stocks also slipped as the government dialled back stimulus. Japanese Smaller Companies, which was second only to technology last year, led declines. Overall, it was a quarter where cyclical sectors perceived to be undervalued performed best.

Top 10 performers by fund:

Following on from a strong 2020, Geiger Counter‘s performance reflected the trends in uranium pricing. Shares in uranium miners increased considerably, with key catalysts including supply constraints and greater demand from China especially, as it looks to nuclear to play an important role in its clean energy policy. The gearing built into the split capital structures operated by Aberforth Split Level Income and Chelverton UK Dividend allowed them to particularly benefit from the ongoing rally in UK equities. Miton UK Microcap, Oryx International Growth, Temple Bar, and Aberforth Smaller Companies all came back strongly as the UK smaller companies and UK equity income sectors, both of which were particularly hard hit over 2020, rallied. Drum Income Plus REIT’s shares were up sharply following its announcement of a strategic review that could lead to it selling all its assets and returning the proceeds to shareholders. It has been unable to shake off a persistent discount since launching in 2015. The move in KKV Secured Loan’s shares following a major repayment by one of its creditors of a loan that the fund had written off, clearing a path for a capital return to its shareholders.

Bottom 10 performers by fund:

It was generally a period of pause for funds within the newly separated China/Greater China sector classification. Baillie Gifford China Growth led share price declines, though Fidelity China Special Situations bucked the trend. As shown in the Appendix section, in share price terms, China/Greater China has been the third-worst performing sector this year. Golden Prospect, one of the best performers last year, was hit by the fall in the gold price. The presence of Aberdeen Latin American Income and BlackRock Latin American largely reflects the region’s (especially Brazil’s) ongoing struggle with COVID-19. It remains a challenging backdrop for aircraft leasing companies like Amedeo Air Four Plus. Owning a fleet of widebody aircraft, in particular, has been especially challenging through the pandemic. The fund severed ties with its manager over the quarter, over fee disagreements. Shares in Biotech Growth and International Biotechnology were down, following a strong 2020 for healthcare-focused assets.

Significant rating changes by fund

Across all of the 322 investment companies with market caps greater than £15m at the end of 2020, the median level of discount increased by (0.8%) to (6.9%). This is still significantly narrower than the double-digit median discounts before the vaccine developments last November.

Getting more expensive:

The first quarter saw discounts narrow across much of the private equity sector. The pandemic’s impact on distributions by the underlying funds has been much less severe than initially feared. BMO Private Equity and Electra Private Equity led the narrowing in discounts. Augmentum Fintech’s collection of ‘disruptive technologies’ remained popular, with the adoption of many of these speeding up as a result of the pandemic. The fund bucked the trend of tech-focused strategies taking a backseat. An increase in BMO Real Estate’s NAV calmed investors. Riverstone Credit Opportunities Income, which makes loans to the energy sector, also benefited from much-improved sentiment within energy markets.

Getting cheaper:

Premiums in Baillie Gifford China Growth and Pacific Horizon (it has significant exposure to China) narrowed as China dialled down its stimulus, as discussed earlier. Globalworth Real Estate is a major office-space investor in Poland and Romania, where commercial office letting remains strained. Herald and Manchester & London are major investors in technology. Aberforth Split Level Income’s price action did not keep up with the increase in the NAV, leading to a widening in its discount over the quarter.

Money in and out

The 325 investment companies raised £2.9bn of net new capital over the first quarter, with the IPOs of Cordiant Digital Infrastructure, Digital 9 Infrastructure, and VH Global Sustainable Energy Opportunities bringing in a combined £917m.

Money coming in:

There were three major IPOs over the first quarter. Cordiant Digital Infrastructure and VH Global Sustainable Energy Opportunities launched in February. Cordiant Digital Infrastructure will make investments in digital infrastructure assets, with a focus on data centres, mobile telecommunications/broadcast towers and fibre-optic network assets. VH Global Sustainable Energy Opportunities’s will focus on energy infrastructure assets, mainly in countries that are members of the EU and part of the OECD. Triple Point’s Digital 9 Infrastructure launched with a £300m over March, which although below its £400m target, was still a very good result. It will pursue opportunities in digital infrastructure assets, which deliver a reliable internet including (but not limited to) subsea fibre, data centres, terrestrial fibre, tower infrastructure and small cell networks (including 5G). The growth capital fund, Chrysalis Investments, brought in £300m in an upscaled placing. The fund has some momentum behind it after some good realisations over 2020, notably in TransferWise. Tritax EuroBox brought in €230m, as the logistics sector has taken off since the pandemic with online retailing growing exponentially. Greencoat UK Wind had spent almost £100m on investments in two wind farms within days of its raise. Elsewhere, SDCL Energy Efficiency Income, Smithson, Supermarket Income REIT, and LXI REIT, raised over £100m.

Money going out:

Returns of capital were led by Scottish Mortgage, Alliance Trust, and Gulf Investment. Scottish Mortgage has been actively buying back shares. Gulf Investments shrank as 44% of shareholders opted for the exit in a tender held in December.

Major news stories over Q1 2021

Portfolio developments

Corporate news

Managers and fees

Property news

QuotedData views


Here is a selection of what is coming up. Please refer to the Events section of our website for updates between now and when they are scheduled:


Have you been listening to our weekly news round-up shows? Every Friday at 11 am we run through the more interesting bits of the week’s news and we usually have a special guest or two answering questions about a particular investment company.

Friday The news show Special Guest Topic
6 November RSE, LBOW, SONG, VIN Michael Bonte-Friedheim NextEnergy Solar
13 November RHM, VGEO, SHED, RDI Roger Clarke IPSX Group
20 November THRG, MTE, UKML Fran Radano North American Income Trust
27 November SBO, NAVF, CCJI Nicholas Weindling JPMorgan Japanese
4 December PCFT, IVI, GPM Denis Jackson & James Henderson Law Debenture
11 December KIT, JUS, RTW Steve Cook Sequoia Economic Infrastructure
8 January Review of 2020 Andrew McHattie Review of 2020
15 January GVP, SUPP, SBO James Robson RM Secured Lending
22 January SONG, JGC, RMMC Adam Khanbhai Strategic Equity Capital
29 January SLPE, FSFL, RSE Philip Kent GCP Infrastructure
5 February RHM, IPOs Dean Orrico Middlefield Canadian Income
12 February RTW, UKW, SEC, GVP Alan Gauld Standard Life Private Equity Trust
19 February JLEN, KKV, BH Global, EBOX/BOXE Matthew Tillett The Brunner Investment Trust
26 February LWDB, TIGT, BRFI, RDI Nalaka De Silva Aberdeen Diversified Inc. & Growth
5 March Review of February, CMHY, SEC, GSF, APAX Nick Brind Polar Capital Global Financials
12 March HOME, LXI, BBOX Stuart Young Phoenix Spree Deutschland
19 March CSH, APX, SUPR Richard Moffitt Urban Logistics REIT
26 March MATE, CHRY, DGI9, SYNC Ross Teverson Jupiter Emerging and Frontier Income
9 April Review of March, CBA, SEC, SEIT, SUPP Neil Hermon Henderson Smaller Companies


Our Independent Guide to quoted investment companies is an invaluable tool for anyone who wants to brush up on their knowledge of the investment companies’ sector.

Appendix – Q1 2021 median performance by sector

This note was prepared by Marten & Co (which is authorised and regulated by the Financial Conduct Authority).

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First Quarter 2021 Investment Companies Review

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