Investment Companies Roundup
Kindly sponsored by Baillie Gifford and Aberdeen Standard Investments
Table of contents
- New research
- Performance data
- Discounts and premiums
- Money in and out
- Major news stories
- Events
- Guide
- Appendix – Performance by sector full list
New research
Here is a list of research we published over August:
Aberdeen New Dawn – COVID positive
“In common with other Asian-focused trusts, Aberdeen New Dawn (ABD) has recovered the ground it lost in the early stages of the COVID-19-related market fall and moved into positive territory for 2020. Some of the strongest returns of the past few months have come from stocks within an open-ended fund managed by Aberdeen Standard invested in China A-shares (shares listed on China’s domestic stock markets in Shanghai and Shenzhen).”
“The COVID-19 pandemic has heavily impacted global uranium production, taking around 20% of global capacity offline. The net effect has been a rising uranium price (up 32% so far in 2020) and the managers of Geiger Counter (GCL) believe there is still much to go, as we explore in our annual overview note.”
Premier Global Infrastructure Trust – Renewed focus
“Following on from an exceptional year of performance for the ordinary shareholders of Premier Global Infrastructure Trust (PGIT) in 2019, the trust had a good start in 2020. Whilst it suffered heavily in the pandemic-related market crash, it has bounced back strongly (in both cases the moves were amplified by the gearing effect of PGIT’s split capital structure).”
Seneca Global Income & Growth – On the rebound
“Seneca Global Income & Growth Trust’s (SIGT’s) UK-biased value style and mid-cap exposure suffered heavily during the first quarter of 2020 as markets collapsed. However, the manager used the rout to take advantage of deep value opportunities and SIGT has benefitted as markets have rebounded. The manager believes there is much more to come.”
Performance data
August’s median total share price return from investment companies was +2.4% (the average was +3.0%), which compares with 0% last month. Over the year-to-date, median returns are down by (9.7%). It was another excellent month for technology companies, led by the US ‘FANGs’, and ably supported by companies in Asia-Pacific, where tech-IPO activity has been hotting-up. Debt funds, with their exposure to sectors where performance has been far less robust, were once again amongst the worst performers.
Best performing sectors over August:
| wdt_ID | Sector | Median share price total return (%) | Median NAV total return (%) | Change in median discount (%) | Median discount 31/08/20 | Median discount 31/07/20 (%) | Number of companies in the sector | Median sector market cap 31/08/20 |
|---|---|---|---|---|---|---|---|---|
| 1 | Technology & Media | 7.70 | 5.50 | 3.20 | 0.60 | -2.70 | 3 | 1,022.00 |
| 2 | European Smaller Companies | 7.20 | 6.60 | 1.80 | -12.30 | -14.10 | 4 | 426.00 |
| 3 | UK Smaller Companies | 6.70 | 6.00 | -2.10 | -16.30 | -14.20 | 24 | 86.00 |
| 4 | North American Smaller Companies | 6.40 | 3.40 | 2.60 | -10.20 | -12.80 | 2 | 151.00 |
| 5 | Asia Pacific | 5.90 | 5.90 | 3.20 | 0.60 | -2.70 | 8 | 136.00 |
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 August:
| wdt_ID | Sector | Median share price total return (%) | Median NAV total return (%) | Change in median discount (%) | Median discount 31/08/20 | Median discount 31/07/20 (%) | Number of companies in the sector | Median sector market cap 31/08/20 |
|---|---|---|---|---|---|---|---|---|
| 1 | Insurance & Reinsurance Strategies | -9.20 | -2.00 | 1.90 | -17.20 | -19.10 | 3 | 42 |
| 2 | Latin America | -3.80 | -6.80 | 2.60 | -11.70 | -14.30 | 2 | 75 |
| 3 | Leasing | -2.10 | 0.00 | 0.00 | -51.30 | -51.30 | 7 | 72 |
| 4 | Debt - Loans & Bonds | -1.40 | 0.90 | -2.20 | -6.90 | -4.70 | 16 | 129 |
| 5 | Japanese Smaller Companies | -0.90 | 4.60 | -2.60 | -4.70 | -2.10 | 5 | 121 |
August’s biggest movers in NAV and price terms are shown in the charts below:
On the positive side:
- Scottish Mortgage’s NAV received a major boost on the news that the Chinese payments company, Ant Group, was planning to IPO at a targeted valuation of up to $300bn.
- FastForward Innovations’s shares are up over 20% this year, with its investments in medical cannabis a particular bright spot.
- Shares in BMO Real Estate, Alternative Income REIT, BMO Commercial Property, and Regional REIT were up, as the market saw value in UK property after discounts climbed above (40%) in some cases.
- Value was also the driver behind Riverstone Energy’s monthly market performance. Baillie Gifford US is having a stellar calendar year propelled by e-commerce and tech holdings such as Shopify and Zoom.
- India Capital Growth was the best performing India fund, as the country drew in monthly foreign fund inflows above $6bn. This was largely value-driven – India has been severely impacted by the pandemic, with the economic fallout likely to last several years.
On the negative side:
- Latin America’s ongoing struggle with COVID-19 was reflected in the performances of JPMorgan Brazil, BlackRock Latin American, and Aberdeen Latin America Income.
- Coming a few weeks after it passed a continuation vote, the equipment leasing and asset finance fund, KKV Secured Loan, announced that it may have to make further write-downs to the portfolio.
- Close to half of Schroder European Real Estate’s portfolio is in offices, where the recovery continues to be slow.
- US-focused Life Settlement Assets A, which invests in portfolios acquired from special or distressed” situations, has generally held up well this year with population ageing and favourable public policies driving positive market returns this year.
- Elsewhere, Marwyn Value’s performance is inextricably linked to the car auction company, BCA Marketplace, and Golden Prospect Precious Metals gave back some of its gains.
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 | 31 Aug (%) | 31 Jul (%) |
|---|---|---|---|
| 1 | FastForward Innovations | 33.20 | 0.30 |
| 2 | Riverstone Energy | -29.20 | -46.20 |
| 3 | Dunedin Enterprise | -20.80 | -35.70 |
| 4 | BMO Real Estate | -29.60 | -43.30 |
| 5 | Alternative Income REIT | -31.20 | -43.80 |
- Other than the funds not discussed in the ‘winners and losers section’, the greatest discount narrowing came from Dunedin Enterprise. The private equity sector fund reported flat NAV growth over the three months to June 30. Like many of its sector peers, the company’s discount had widened considerably.
Cheaper relative to NAV:
| wdt_ID | Fund | 31 Aug (%) | 31 Jul (%) |
|---|---|---|---|
| 1 | KKV Secured Loan ordinary | -68.70 | -57.90 |
| 2 | Life Settlement Assets A | -16.60 | -7.10 |
| 3 | CVC Credit Partners Euro Opps. | -11.30 | -2.00 |
| 4 | VietNam Holding | -20.20 | -11.00 |
| 5 | AVI Japan Opportunity | 0.90 | 8.80 |
- Investors may be concerned about credit quality within KKV Secured Loan’s portfolio.
- The presence of VietNam Holding and AVI Japan Opportunity reflects an increase in COVID-19 cases in two countries that had hitherto largely insulated themselves.
Money in and out
Fundraising highlights from the month:
Money coming in:
- August is typically a very quiet month for fundraising with this year being no different.
- In the meantime, fundraising was led by Smithson, Worldwide Healthcare, Personal Assets, Allianz Technology, and Edinburgh Worldwide.
Money going out:
- Scottish Mortgage and Pershing Square continued to demonstrate their commitment to buybacks.
- Elsewhere, we also had share repurchase activity from Witan, JPMorgan American, and Templeton Emerging Markets.
Major news stories
Portfolio developments:
- Medical cannabis was a bright spot in FastForward Innovations’s results
- International Public Partnerships updated on the COVID-19 impact on Tideway project
- Hipgnosis announced deals with Robert ‘RZA’ Diggs, No I.D, Blondie’s co-founders, and Barry Manilow
- Bluefield Solar bought a portfolio of 15 ground-mounted solar PV plants for an initial £106.6m
- Axiom European Financial Debt expressed caution towards the banking sector
- BMO Private Equity said that its initial projections may prove pessimistic
- Hg added to its Visma investment, valuing it as the largest ever software buyout globally
- Aberdeen New India benefitted from the defensiveness of its portfolio
- Murray International’s interim results reflected the challenges faced by global equity income funds
- VinaCapital Vietnam Opportunity announced an investment in the Thu Cuc International General Hospital
- SDCL Energy Efficiency bought an EV charging portfolio
- HgCapital Trust’s manager became the majority shareholder in Evaluate
- Allianz Technology has benefitted profoundly from its remote working investments
Corporate news:
- We discussed Triple Point Energy Efficiency, a potential new issue
- Witan Pacific released a circular ahead of a proposed change of name to Baillie Gifford China Growth Trust
- Pershing Square announced a $200m bond issuance
- Secured Income published wind-down proposals
Managers and fees:
Property news:
- NewRiver REIT announced improved rent collection figures
- Phoenix Spree has been bucking the COVID trend
- Starwood European Real Estate Finance announced a buyback programme
- Civitas confirmed that a cash raise was likely, with its portfolio on-track
Events
Here is a selection of upcoming events:
- Dunedin Income Growth Investment Trust – Conference call, 8 September 2020
- What does the future hold for BMO Commercial Property Trust? 9 September 2020
- Atlantis Japan AGM 2020, 10 September 2020
- Murray International Trust – Conference call, 10 September 2020
- Hipgnosis Songs Fund online Capital Markets Day, 11 September 2020
- The big picture series – Jupiter Asset Management, 15 September 2020
- Murray International Trust – Conference call, 10 September 2020
- UK Investor Show, 26 September 2020
- Growth Strategies Conference, 14 October 2020
- The London Investor Show, 30 October 2020
- Sustainable & Social Investing Conference, 3 December 2020
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 – August performance by sector
| wdt_ID | Sector | Share price total return YTD* (%) | NAV total return YTD* (%) | Share price total return August (%) | NAV total return August (%) | Change in discount (%) | Discount (%) 31/08/2020 | Discount (%) 31/07/20 | Market cap (£m) 31/08/20 |
|---|---|---|---|---|---|---|---|---|---|
| 1 | Technology & Media | 37.10 | 39.10 | 7.70 | 5.50 | 3.20 | 0.60 | -2.70 | 1,022.00 |
| 2 | Global Smaller Companies | 11.60 | 15.90 | 1.10 | 4.20 | -1.90 | -9.00 | -7.10 | 956.00 |
| 3 | Growth Capital | 11.30 | 4.40 | 3.20 | 0.00 | 8.00 | -17.00 | -25.00 | 367.00 |
| 4 | Biotechnology & Healthcare | 10.00 | 11.20 | -0.20 | 0.00 | -1.10 | -0.40 | 0.60 | 492.00 |
| 5 | Hedge Funds | 9.20 | 13.90 | 0.90 | -0.30 | 4.40 | -22.70 | -27.00 | 66.00 |
| 6 | Infrastructure Securities | 7.30 | 0.80 | 2.80 | -1.50 | 3.50 | -1.40 | -4.90 | 91.00 |
| 7 | Commodities & Natural Resources | 6.10 | 0.80 | 0.50 | 0.00 | -2.50 | -12.20 | -9.70 | 49.00 |
| 8 | Asia Pacific | 3.90 | 4.90 | 5.70 | 3.40 | 2.60 | -9.40 | -12.00 | 345.00 |
| 9 | European Smaller Companies | 3.10 | 7.30 | 7.20 | 6.60 | 1.80 | -12.30 | -14.10 | 426.00 |
| 10 | Renewable Energy Infrastructure | 1.60 | 0.70 | 0.40 | 0.00 | -1.90 | 15.80 | 17.70 | 489.00 |
The legal bit
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