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India and biotech trusts come top in 2014

Investment trusts focused on India and biotech are the top performers in 2014
December 17, 2014

The Association of Investment Companies (AIC) Sector Specialist: Biotechnology & Healthcare was the best performing sector over the 11 months to 30 November, up 40 per cent over the period. It was followed by Country Specialists: Asia Pacific, up nearly 35 per cent and Property Direct - UK, up more than 15 per cent.

The AIC says that the Country Specialists: Asia Pacific sector has performed particularly well over the year to 30 November, moving from the position of 22nd highest performing sector last year to second this year. This sector has been helped by the fact that three out of seven of its constituents are India focused investment trusts.

 

Top 5 sectors in 2014*

SectorYear to date1 year3 years 5 years10 years
Sector Specialist: Biotechnology & Healthcare140142272363474
Country Specialists: Asia-Pacific134134169166376
Property Direct - UK115118155181140
Sector Specialist: Infrastructure115119143172N/A
North America114115156195244

Source: AIC. *Table shows share price total return on £100 lump sum to 30 November 2014

 

The top performing trust over this period was India Capital Growth (IGC) up 71 per cent, followed by IC Top 100 Fund New India Investment Trust (NII) up 59 per cent, which we tipped as a 'buy' on 8 January 2014, and JPMorgan Indian (JII) up 57 per cent.

"Thanks to sound monetary policy from the globally respected Reserve Bank of India governor, Raghuram Rajan, India is much better placed to weather a tighter global monetary environment," says David Cornell, chief investment officer, Ocean Dial Asset Management which manages India Capital Growth. "Furthermore, for the first time in the country's history, there is both the electoral mandate and strong leadership under the helm of Narendra Modi, to create a cleaner political system which delivers long-term economic growth. The size of the opportunity on offer to overseas investors, coupled with the depth of managerial talent available in the stock market presents an exciting chance to take part in a structural long-term growth story that is only at the beginning."

Read more on India

The fourth and fifth best performers were Biotech Growth Trust (BIOG) up 50 per cent and IC Top 100 Fund Worldwide Healthcare (WWH) up 41 per cent.

"The biotech sector's strong performance during 2014 has been driven primarily by robust earnings growth among the leading companies from the launch of new products, continued mergers and acquisitions activity, and several positive clinical data results reflecting innovation across a variety of therapeutic areas," says Geoff Hsu, manager of Biotech Growth Trust.

Read more on the prospects for biotech

 

Top 5 investment companies in 2014*

TrustYear to date1 year3 years  5 years10 years
India Capital Growth171189163148N/A
New India159163161179N/A
JPMorgan Indian157160154141379
Biotech Growth150162381508846
Worldwide Healthcare141139264331445

Source: AIC. *Table shows share price total return on £100 lump sum to 30 Nov 2014, excluding VCTs

 

"It's interesting to look at the top performers over a year but investors need to remember that investing is for the long-term and there are lots of other factors to consider," says Annabel Brodie-Smith, communications director at AIC. "It's also important to remember that investment companies often achieve their best returns over longer periods. This year's hot sector or company may not be so hot next year so it's important to take a long-term view, do your research, have a balanced portfolio and seek advice if you are in any doubt before investing."

The AIC also reports that across the investment trust sector discounts have been generally tight this year: the average discount was 3.3 per cent in February, and has traded in a narrow range all year, before reaching another record low of 3.2 per cent at the end of October and November.

Read more on tight discounts

The organisation also reports that over the past two years a number of investment trusts have abolished their performance fees with 13 doing so this year and 12 last year.

 

Investment trusts that ditched performance fees in 2014

New India Investment Trust 
Schroder Income Growth
Investors in Global Real Estate
India Capital Growth
BlackRock Income & Growth
Investors Capital
Establishment  Investment Trust
JPMorgan European Income
JPMorgan European Growth
Edinburgh Investment Trust
Montanaro UK Smaller Companies
Montanaro European Smaller Companies
Ecofin Water & Power

Source: AIC, Winterflood

 

The AIC adds that 39 investment companies have also made amendments to their charging structures for the benefit of shareholders this year. These include Aberdeen Japan (AJIT) which has revised the basis of the calculation of the management fee from net assets plus debt to net assets with effect from 1 June 2014. The management fee rate remains at 0.95 per cent for net assets up to £50m and 0.75 per cent for net assets above £50m. The trust has net assets of £66.86m.

Six investment companies changed their fund management group this year, with two further companies - British Assets Trust (BSET) and BH Credit Catalysts (BHCG) - announcing plans to change their manager. Shareholder approval will be sought at extraordinary general meetings.

British Assets Trust has also announced plans to change policy, subject to shareholder approval, to adopt a multi-asset income investment strategy.

Read more on this

 

Investment trust manager changes in 2014

TrustOld managerNew manager
F&C US Smaller CompaniesF&C Asset ManagementJupiter Asset Management
HarbourVest Senior Loans EuropeHarbourVest Senior Loan AdvisersSpire Partners
Mid Wynd InternationalBaillie GiffordArtemis Investment Management
Establishment Investment TrustBDT InvestBlackfriars Asset Management
Investors In Global Real EstateCBRE Clarion SecuritiesSchroder Property Management
Atlantis Japan GrowthAtlantis Fund ManagementTiburon Partners

Source: AIC