Investment Companies Monthly Roundup

Kindly sponsored by Baillie Gifford and Aberdeen Standard Investments


Inflation is still very much on investors’ minds at the moment, though views appear divided on whether it’s coming and what the impact might be. But even the bearish can’t help but feel a bit more optimistic after the misery of this time last year. Property performed well in July, with UK Healthcare and UK Commercial specialist trusts in the top five performing sectors, perhaps reflecting the reopening of the UK’s major cities and offices and the continuing success of its vaccination programme. Meanwhile, private equity and smaller companies mandates also delivered good returns, as consumer spending is increasing with an onus on ‘shopping small’ and with home-grown businesses as part of the recovery process. Meanwhile, the China / Greater China and country specialist (the latter of which is 50% made up of Vietnam funds) sectors saw a complete turnaround after being among the best performers in June. This comes as both China and Vietnam have seen sudden surges in Covid-19 cases while India still tries to manage theirs. Furthermore, in China, government/regulatory clampdowns on a range of businesses have knocked share prices. Commodities & natural resources funds are still down after making record gains at the start of the year (see Appendix 1 for a breakdown of how all the sectors have performed this year).

July’s median total share price return was 1.3% (the average was 1.4%) which compares with 0.4% in June. Readers interested in the most recent briefings from the industry can click here to access our economic and political roundup.

Best performing sectors over July

Worst performing sectors over June

On the positive side

Smaller companies trusts dominated the best performers in NAV terms last month, with Montanaro European Smaller Companies, Montanaro UK Smaller Companies, Standard Life UK Smaller Companies, JPMorgan European Discovery and European Assets all up by 5% or more. European trusts in general have started to pick up as vaccination programmes have grown in momentum, having initially fallen behind the UK. In share price return terms, private equity trusts were the favourites for the month, led by JPEL Private Equity which was up by more than 20% after announcing the sale of its largest investment and a return of cash to shareholders. It was no surprise that GCP Student Living topped the table after it received a takeover bid of a staggering £969m – 30% above its share price during the month.

On the negative side

China funds were the biggest losers in both NAV and share price terms in July, with Fidelity China Special Situations, JPMorgan China Growth & Income and Baillie Gifford China Growth all down. In addition to the government/regulatory clampdowns mentioned above, the country ‘s economic recovery appears to have lost steam as production has fallen and a fresh bout of Covid-19 outbreaks has taken hold. Some feel that policymakers may need to do more to aid the recovery. This may have also had an impact on global emerging markets names Templeton Emerging Markets and Genesis Emerging Markets. It was revealed early in July that Fidelity would be Genesis Emerging’s new manager from September.

Discounts and premiums

More expensive and cheaper relative to NAV

As already discussed, GCP Student Living received a knock-out takeover bid in July, from Scape Living (funded by APG – a current shareholder) and iQ (funded by Blackstone) valuing the company at £969m. The bid price of 213p per share was a 30.7% premium to its 1 July share price and a 19.1% premium to its 31 March 2021 EPRA net tangible asset value of 179p. Unsurprisingly this has seen its 17.4% June discount swing significantly to an attractive 8.4% premium. Doric Nimrod Air Three rose after it published a factsheet updating on demand for its A380s. Augmentum Fintech’s premium has reverted back to its usual levels having narrowed in June, after announcing plans to amend its investment policy and to raise £40m. Private equity names JPEL Private Equity and HgCapital Trust also saw their premiums increase in July. The end of June saw the latter to agree to sell its position in Allocate, a leading workforce and people management software-as-a-service provider, at an uplift of £9.4m.

Meanwhile, commodities & natural resources trusts Baker Steel Resources and CQS Natural Resources Growth & Income became cheaper during the month, with their discounts widening into double digits. Gabelli Merger Plus+ also saw its discount widen but we note that this has reversed early in August. There is no good reason why Standard Life Private Equity’s discount widened over July. JPMorgan China Growth & Income was impacted by the negative sentiment generated by the government/regulator triggered share price falls in the country.

Money in and out

Money coming in and going out

A whopping £1,318.4m of net new money was raised in July with two IPOs and several fundraises. Seraphim Space launched in the middle of the month, having been oversubscribed and exceeding its target of £150m. HydrogenOne Capital Growth also launched but failed to hit its £250m target, raising just £108m – not even making the top biggest fundraisers for the month. While this figure is slightly disappointing, if it can get the money invested quickly and values rise, it has a good chance of growing. However, if there is any initial disappointment within the portfolio and the trust goes to a discount, it could face a real challenge.

Octopus Renewables Infrastructure raised gross proceeds of around £150m through a placing, having only targeted £100m. Meanwhile Hipgnosis Songs’ placing, which was only announced in June, was also oversubscribed. The trust had a target of £150m but raised £156m during the month.

Share buybacks were led by Scottish Mortgage, SME Credit Realisation, Alliance Trust, Witan and Oakley Capital.

Recently published research notes

JLEN Environmental Assets – On the front foot

Even before its recent acquisitions, JLEN Environmental Assets (JLEN) could already boast the most diversified portfolio of its peers. A change in investment policy, approved by shareholders in March 2021, allowed it to invest in a wider universe of environmental infrastructure assets that supports the transition to a low-carbon economy. Since then, we have seen JLEN’s first investment in a biomass-fuelled combined heat and power plant, a co-investment in a battery storage asset, and the purchase of a stake in an Italian energy-from-waste plant. Each of these investments is discussed in this note.

AVI Global Trust – Focused high conviction portfolio

AVI Global Trust (AGT) has had a strong run of performance since last November. Its manager, Asset Value Investors (AVI) has been realising substantial profits from a number of positions where the discounts that these companies have traded at in the market, relative to their underlying net asset values, have narrowed significantly or have been eliminated altogether. As we describe on page 9 onwards, the proceeds of these sales are being recycled into a more focused, high conviction portfolio of good quality companies trading at meaningful discounts to AVI’s estimate of their true asset value.

Alliance Trust – The fruits of diversification

More than four years after it refocused its global equity portfolio, Alliance Trust (ATST) has proven the merits of blending different expertise across different investment styles. Since the overhaul in April 2017, it has matched its peers and beaten its benchmark. In particular, over the past 14 months, which have been clouded by the uncertainty created by the coronavirus pandemic, its strategy has outperformed.

Downing Renewables and Infrastructure Trust – Ahead of expectations

It is still early in the life of Downing Renewables and Infrastructure Trust (DORE), yet, with an early focus on Swedish hydropower – 51% of the portfolio at the end of March 2021 – complemented by a diverse portfolio of UK solar assets, it can already boast a portfolio that is clearly differentiated from its peers.

AVI Japan Opportunity Trust – Progress on a number of fronts

210720 AJOT AVI Japan Opportunity Trust

AVI Japan Opportunity Trust (AJOT) is not yet three years old, but it is making great strides in its various campaigns to improve shareholder value across a select group of Japanese companies. The value opportunity presented by the Japanese market is considerable, and this is true for smaller companies and value-style stocks in particular. Many of AJOT’s holdings trade close to the value of cash and listed investments on their balance sheets. Attitudes to corporate governance and shareholder rights are changing in Japan, helped by supportive legislation. After a COVID-related lull in corporate activity last year, things are heating up and this is flowing through into AJOT’s NAV.

Polar Capital Technology – Exciting times

In the short term, the technology sector has given back some of its considerable long-term outperformance of the wider market. Ben Rogoff, manager of Polar Capital Technology Trust (PCT), is unfazed by this. The COVID-19 pandemic has accelerated many societal shifts that Ben believes will be permanent. Areas such as e-commerce, cloud computing, video conferencing, digital entertainment and telemedicine have benefitted. At the same time, advances in sectors such as electric vehicles (EVs) and artificial intelligence (AI) will revolutionise a swathe of industries.

Major news stories over July

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
9 April Review of March, CBA, SEC, SEIT, SUPP Neil Hermon Henderson Smaller Companies
16 April BLND, PSDL, SBO Hugo Ure Troy Income & Growth
23 April AEWU, AIF, GSF, MNTN James Harries Securities Trust of Scotland
30 April AGT, DIG, HOME, GWIini Nick Montgomery Schroder Real Estate Investment Trust
7 May JLG, JLIF, SIGB, SMP Helen Steers Pantheon International
14 May NPSN, RMDL Stuart Widdowson Odyssean
21 May AIF, CORD, SBO Georgina Brittan JPMorgan Smaller Companies
28 May GHE, SEC Matthew Potter Honeycomb
4 Jun ARR, BHGG, BHGU, BHME, BHMG, BHMU, LTI, SCIN, WWH Ben Ritchie Dunedin Income Growth
11 Jun CORD, DGI9, PHI Stephanie Sirota RTW Ventures
18 Jun AUGM, LTI, MTE Stephen Inglis Regional REIT
25 June AEMC, CRS, BOOK Michael O’Brien Fundsmith Emerging Equities
2 July GSS, PCFT, SHED, BSIF David Conlon GCP Asset Backed Income
9 July AGT, DIGS Matthias Siller Baring Emerging EMEA Opportunities
16 July AGT, ABD, SONG, PRSR, RHM Nick Wood Quilter Cheviot
23 July RNEW, PSH Gareth Powell Polar Capital Global Healthcare

Coming up

6 August BCPT Matthew Howard BMO Commercial Property
13 August WTAN Andrew Bell Witan
20 August AEWU Alex Short AEW UK REIT
27 August HHI Henderson High Income David Smith
3 September TMPL Temple Bar Ian Lance
10 September ATST Craig Baker Alliance Trust
17 September ATR Schroder Asia Total Return Robin Parbrook
24 September BMPG/BMPI BMO Managed Portfolio Peter Hewitt
1 October SUPP Schroder UK Public Private Tim Creed


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 – July median performance by sector

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