The Association of Investment Companies (AIC), in association with Investors’ Chronicle, is offering readers the chance to win £5,000 to invest in an investment company of their choice.
We all know the benefits of investing for the long term and this is something investment companies specialise in. This year marks 153 years since the launch of the first investment company, F&C Investment Trust, and there are now 25 investment companies which are over 100 years old.
Today there are hundreds of investment companies to choose from and industry assets reached a record £266 billion in September. But how do you decide if an investment company is right for you? And how should you choose one? The answers will depend on whether you are looking for income or growth or a combination of the two, as well as your circumstances and appetite for risk.
Strong long-term performance Everyone is aware that past performance is no guide to future returns, but it’s obviously something to be considered. When looking at performance data, it makes sense to look at a variety of time periods and also to look at performance for individual years to give a clearer picture of how a company has performed in different market conditions.
Investment companies invest in a diverse range of assets and the AIC provides a wealth of information to help investors along the way. Its website www.theaic.co.uk offers performance data, as well as information on gearing (borrowing), discounts/premiums, dividends, charges, ESG, portfolio and management information. You can even download the latest factsheet and annual report of an investment company.
Income The investment company sector has an unrivalled dividend track record. This is because investment companies have the flexibility to retain some of the income they receive in good years and use it to boost dividends in leaner ones. Known as dividend smoothing, this has enabled many investment companies to increase their dividends through both good and bad times. Although dividends are never guaranteed, the structure has helped many investment companies consistently increase their dividends over multiple decades and through times of market stress. There are 18 dividend hero investment companies that have increased their dividends each year for 20 years or longer. Six of the dividend heroes have consecutively increased their dividends for 50 years or more!
Innovation The investment company structure lends itself well to innovation, as the growth of specialist sectors in areas such as renewable energy, growth capital, infrastructure and specialist property demonstrates. In addition, some companies are using specialist investment strategies that are difficult to replicate elsewhere, such as in private equity and venture capital trusts (VCTs). If you are looking for a company that’s a little bit different, the investment company sector offers a good deal of choice. But there are plenty of more mainstream investment companies too, investing in areas such as the UK or global equities.
Durability The past 153 years have seen two World Wars, the Great Depression, the tech boom (and bust), the 2008/9 financial crisis and now the COVID-19 pandemic. We never know what’s around the corner, but investment companies’ 153-year history demonstrate the strength and durability of their structure, which is just as relevant for today’s investors.
For more information on investment companies, visit www.theaic.co.uk
Question:
How many years ago did the first investment company launch?
- 150
- 153
- 154
For full terms and conditions click here.
Issued by the Association of Investment Companies (AIC). All entries to this competition must be received by 12 December 2021. The winner will be the first correct entry drawn at random following the closing date for entries. The winner’s prize will be paid by bank transfer only. Only one entry per person is admitted. This offer is only open to UK residents aged 18 years or over and excludes employees of the AIC, connected companies, their agents or their families, or anyone connected with the competition. The judge’s decision is final. Investment companies are equities whose value can go down as well as up and you may not get back the full amount invested. Past performance is not a guide to future performance. If you are in any doubt about whether an investment company is suitable for you, you should consult a financial adviser.
Investors' Chronicle is a journalistic product which is for general information and entertainment purposes only. Our content does not constitute any form of advice, recommendation, representation, endorsement or arrangement by the Financial Times. It is not intended to be and should not be relied upon by users in making (or refraining from making) any specific investment, purchase, sale or other decisions. Appropriate independent advice should be obtained before making any such decision, such as from a qualified financial adviser.
