- It is harder to monitor investment trusts that invest in unlisted assets than funds that invest in equities
- It is important to assess the durability of their dividends and the fundamentals behind them
- Their NAV performance can give an idea of how their assets hold up in unusual circumstances
With investors looking beyond traditional markets for returns, the alternative assets fan club continues to grow. Investment trusts that invest in assets other than public equity and bond markets have dominated recent fundraising activity. The three trust sectors that accounted for the largest volumes of secondary fundraisings in the first half of 2021 focus on infrastructure and unlisted companies, and investment trust initial public offerings (IPOs) in recent years have been dominated by non-equity vehicles.
And these asset classes continue to grow and mature. Property and infrastructure sectors have broadened out in recent years with launches of trusts that focus on sub-sectors, from battery storage funds in the renewables space to Home REIT (HOME) which invests in accommodation for the homelessness. A greater number of trusts now invest in unlisted companies with, for example, a newer asset class becoming available to private investors via the launch of two music royalties trusts.