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QuotedData’s Investment Companies Roundup – October 2020

Investment Companies Roundup

Kindly sponsored by Baillie Gifford and Aberdeen Standard Investments

 Table of contents 

 New research

Here is a list of research we published over September:

Standard Life Investments Property Income Trust – Building for a new normal

“Unlike many of its peers, Standard Life Investments Property Income (SLI) has a 52.7% portfolio weighting to the buoyant industrial sector, which has performed positively during the pandemic due to an acceleration in online retailing and is forecast to grow further. It has also been on the front foot in the investment market, taking advantage of buying opportunities that would not have existed six months ago. We explore these themes in our latest annual overview note.”

Temple Bar Investment Trust – Keeping faith

“Temple Bar Investment Trust’s (TMPL) board recently reiterated its commitment to a value style of investing. The management contract has been handed to Nick Purves and Ian Lance of RWC Partners, two managers with considerable experience of managing income portfolios using a value-style approach. The RWC team says that value stocks have never looked more unloved in the 30-odd years that they have been managing money.”

Home REIT – Tackling Homelessness – IPO

Home REIT - Tackling homelessness - IPO

“We explored Home REIT’s prospects in a recently published IPO note. It is a newly-established closed-ended investment company. It is looking to raise £250m to acquire and create a portfolio of homeless accommodation across the UK, let on long-term index-linked leases and delivering a much-needed positive social impact. It will aim to achieve a total shareholder return of 7.5% per annum over the medium term.”

Aberdeen Emerging Markets Investment Company – Peer group leading China exposure

“With 38.9% of Aberdeen Emerging Markets (AEMC) now allocated to China and 72.5% to wider Asia-Pacific, extensive exposure is provided to the region that has been the quickest to return to near-normal economic activity. AEMC continues to trade at what seems an excessively wide discount to its peer group, particularly when also factoring in its dividend yield and low ongoing charges.”

JPMorgan Japanese Investment Trust – Number one for a good reason

“Over three years, JPMorgan Japanese Investment Trust (JFJ) is the best-performing trust in its peer group of competing funds by some margin (see page 15). The trust’s remarkable performance record has been achieved by following a convection-driven stock-picking approach that focuses on quality and growth, two aspects that have been in demand in a world tackling COVID-19.”

 Performance data

September’s median total share price return from investment companies was (0.3%) (the average was +0.1%), which compares with +2.4% last month. Over the year-to-date, median returns are down by (9.2%). Japanese funds shone brightest over a month whether the hitherto technology-led rally took pause. Biotech and healthcare funds continued to fare well, with the outcome of the US presidential election not expected to significantly affect healthcare policy. UK assets were amongst the worst performers, hit by the combined impact of a second wave of COVID-19 and the lingering risk of a hard Brexit.

Best performing sectors over September:

wdt_ID Sector Median share price total return (%) Median NAV total return (%) Change in median discount (%) Median discount 30/09/20 Median discount 31/08/20 (%) Median sector market cap 30/09/20 (£m) No. of companies in the sector
1 Japanese Smaller Companies 15.30 11.10 -1.70 -6.40 -4.70 126.90 5
2 Japan 7.40 8.40 0.20 -10.40 -10.60 239.90 6
3 Biotechnology & Healthcare 5.40 3.60 1.50 1.10 -0.40 538.20 7
4 Hedge Funds 5.10 2.40 -0.30 -22.90 -22.70 63.80 11
5 Property - Rest of World 4.10 0.00 1.70 -49.50 -51.20 47.80 4

Please refer to the ‘appendix’ section for a comprehensive list of sector-specific performance. Readers interested in the most recent briefings from the industry can click here to access our economic and political roundup.

Worst performing sectors over September:

wdt_ID Sector Median share price total return (%) Median NAV total return (%) Change in median discount (%) Median discount 30/09/20 Median discount 31/08/20 (%) Median sector market cap 30/09/20 (£m) No. of companies in the sector
1 Infrastructure Securities -6.70 1.00 -5.8 -7.10 -1.20 86.60 2
2 Property - UK Commercial -3.60 0.00 -6.2 -33.20 -27.00 282.60 16
3 UK Equity Income -3.00 -2.20 -0.4 -8.10 -7.70 246.90 27
4 Latin America -2.90 -3.10 nil -13.00 -13.00 73.90 2
5 Property - Debt -2.80 0.00 -2.4 -15.60 -13.20 89.50 5

September’s biggest movers in NAV and price terms are shown in the charts below:

On the positive side:

  • It was almost a clean sweep for Japan funds over September, with 7 out of the top 10 best performers in NAV terms coming from the country. Flows into Japanese strategies were mainly driven by the relatively attractive value on offer, a corporate sector in better balance-sheet health than the vast majority of the developed world, and the belief that new Prime Minister, Yoshihide Suga, will continue Shinzo Abe’s policy agenda. NAV performance was led by smaller companies-focused Baillie Gifford Shin Nippon and Atlantis Japan Growth, both of whom have a significant allocation to the industrials sector.
  • Witan Pacific’s shares have been increasing after shareholders backed proposals to shift to a Baillie Gifford-managed China-only strategy.
  • Shares in Gulf Investment rose over 8% following the release of its annual results, which included a comparatively resilient outlook for the region.
  • Shares in Infrastructure India surged after it announced that it expected its annual NAV to increase. Earlier in the month, it was granted a 3-month extension to publish its annual results.

On the negative side:

  • Geiger Counter’s shares are sensitive to the uranium price.
  • Though Temple Bar’s NAV declined by (8.3%), the shares have recently built up a head of steam (click here to access our initiation note).
  • Aurora’s reflects the souring in sentiment towards UK assets, as the second wave of COVID-19 struck and the UK remained at an impasse with the EU.
  • After a strong August, UK commercial property funds, including Regional REIT and Standard Life Investments Property Income, sold off. Canada has also seen a considerable increase in COVID-19 cases over recent weeks.
  • Shares in Middlefield Canadian Income, are down by about 23% so far this year. Real estate and financials represent its largest sector allocations.


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 Discounts and premiums

The tables below show the top five movers in either direction (more or less expensive relative to NAV):

More expensive relative to NAV:

wdt_ID Fund 30 Sept (%) 31 Aug (%)
1 BlackRock Income and Growth 6.70 -4.20
2 Honeycomb -10.20 -20.00
3 BH Macro GBP 13.40 3.90
4 Marble Point Loan Financing -9.60 -18.10
5 Geiger Counter 14.50 6.00
  • In price terms, BlackRock Income and Growth has been the second-best performing UK equity income fund, over the year to date.
  • Direct lender Honeycomb’s shares have come back strongly since late August, with cash collection holding up well.
  • Macro hedge funds, BH Macro GBP, benefit from large moves in bonds and currencies in particular, so the environment this year has been fertile.

Cheaper relative to NAV:

wdt_ID Fund 30 Sept (%) 31 Aug (%)
1 BMO Real Estate -46.20 -29.60
2 FastForward Innovations 19.00 33.20
3 Alternative Income REIT -37.60 -27.00
4 Regional REIT -33.20 -23.10
5 GCP Student Living -27.50 -19.00


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 Money in and out

Fundraising highlights over the month:

Money coming in:

  • The market for new issues returned with a vengeance, with several funds hoping to launch. They include Tellworth British Recovery and Growth, Buffetology Smaller Companies, Home REIT, and Mailbox REIT.
  • Existing funds, led by Greencoat UK Wind and Hipgnosis Songs, raised considerable capital too. There continues to be significant capital available for sectors that provide alternative sources of income, like renewables and royalties.
  • Smithson, Personal Assets, Worldwide Healthcare, and Pacific Horizon also issued shares.

Money going out:


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 Major news stories

Portfolio developments:

Corporate news:

Managers and fees:

Property news:

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 Events

Here is a selection of upcoming events:

Master Investor – the UKs largest private investor show – 5 December 2020

 Guide

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 – September performance by sector

wdt_ID Sector Share price total return YTD* (%) NAV total return YTD* (%) Share price total return September (%) NAV total return September (%) Change in discount (%) Discount 30/09/2020 (%) Discount 31/08/20 (%) Market cap 30/09/20 (£m)
1 Technology & Media 30.20 39.40 0.00 2.30 -0.90 -0.40 0.60 1,025.00
2 Japanese Smaller Companies 17.10 18.30 15.30 11.10 -1.70 -6.40 -4.70 127.00
3 Unclassified 16.30 16.30 2.60 2.60 2.60 3.10 0.60 140.00
4 Growth Capital 14.90 9.60 -0.30 0.00 0.30 -16.20 -16.50 371.00
5 Biotechnology & Healthcare 14.80 14.20 5.40 3.60 1.50 1.10 -0.40 538.00
6 Hedge Funds 13.60 12.70 5.10 2.40 -0.30 -22.90 -22.70 64.00
7 Commodities & Natural Resources 13.30 -0.40 0.00 -0.70 -0.20 -11.90 -11.70 62.00
8 Global Smaller Companies 10.40 17.50 0.00 1.30 -1.10 -9.80 -8.70 1,016.00
9 Royalties 10.00 11.40 -2.90 0.00 -3.10 2.40 5.50 933.00
10 Asia Pacific 7.30 7.80 2.70 3.00 -2.10 -11.30 -9.20 357.00

 The legal bit

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

This note is for information purposes only and is not intended to encourage the reader to deal in the security or securities mentioned within it.

Marten & Co is not authorised to give advice to retail clients. The note does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

This note has been compiled from publicly available information. This note is not directed at any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the publication or availability of this note is prohibited.

Accuracy of Content: Whilst Marten & Co uses reasonable efforts to obtain information from sources which we believe to be reliable and to ensure that the information in this note is up to date and accurate, we make no representation or warranty that the information contained in this note is accurate, reliable or complete. The information contained in this note is provided by Marten & Co for personal use and information purposes generally. You are solely liable for any use you may make of this information. The information is inherently subject to change without notice and may become outdated. You, therefore, should verify any information obtained from this note before you use it.

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No information contained in this note shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction.

Investment Performance Information: Please remember that past performance is not necessarily a guide to the future and that the value of shares and the income from them can go down as well as up. Exchange rates may also cause the value of underlying overseas investments to go down as well as up. Marten & Co may write on companies that use gearing in a number of forms that can increase volatility and, in some cases, to a complete loss of an investment.

October Investment Companies Roundup

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