New issues: various notes and coins

Follow The Money: Investment Trust New Issues

Today sees the launch of Tritax EuroBox (EBOX), which follows in the footsteps of the very popular Tritax Big Box (BBOX). Therefore, it seemed like an opportune time to review what new investment trusts have joined the stock market recently, to see what sectors are sizzling hot and what are definitely not.

There have been 29 investment trusts launched since the start of 2017 as far as I can tell. They are currently worth a collective £5bn, which represents about 3% of the total market value of all investment trusts of around £160bn. While that suggests that we are not seeing a flood of new investment trusts, there are three or four sectors that seem to be pretty popular right now.

Here’s one of my trademark ‘too long to fit on a single page’ tables:

New investment trusts

Investment trustSectorLaunchedMkt cap £mYield %+Prem/
ScotGemsGlobal Smaller CompaniesJun-1748-7
Odyssean ITUK Smaller CompaniesMay-18927
Aberforth Split Level IncomeUK Smaller CompaniesJul-171894.0-5
Downing Strategic Micro-capUK Smaller CompaniesMay-17512
Baillie Gifford US GrowthNorth AmericaMar-182364
Jupiter Emerging & Frontier IncomeGlobal Emerging MarketsMay-17985.52
Ashoka IndiaCountry SpecialistJul-18485
JP Morgan Multi-AssetFlexible InvestmentMar-18884.2-5
CIP Merchant CapitalFlexible InvestmentDec-1749-4
PRS REITProperty Direct – UKMay-175174.46
LXI REITProperty Direct – UKFeb-172185.05
Tritax EuroBoxProperty Direct – EuropeJul-18300* 4.83
Aberdeen Standard Euro Logistics IncomeProperty Direct – EuropeDec-17194* 5.54
Warehouse REITProperty SpecialistSep-171676.00
Triple Point Social Housing REITProperty SpecialistAug-172143.57
Supermarket Income REITProperty SpecialistAug-171895.46
Residential Secure Income REITProperty SpecialistJul-171702.7-2
AEW UK Long Lease REITProperty SpecialistJun-17733.40
Impact Healthcare REITProperty SpecialistMar-171985.83
Marble Point Loan FinancingDebtFeb-182127.85
Fair Oaks Income 2014DebtApr-17468.49
BioPharma CreditDebtMar-179515.24
TOC Property Backed LendingDebtJan-17286.87
Gore Street Energy StorageRenewable EnergyMay-18312
Greencoat RenewablesRenewable EnergyJul-172935.514
Life Settlements AInsurance & ReinsuranceMar-1868-27
Tufton Oceanic AssetsLeasingDec-17963
Augmentum FintechTech Media & TelecommMar-18963
EJF InvestmentsFinancialsApr-171105.53

Source: AIC website, * denotes the target yield 

A couple of notes on the above. I’ve not looked at venture capital trusts for this, and have taken the dividend yield data at face value from the AIC website. I suspect this data point is based on historic payouts, so for the newest investment trusts there may not have been any payments yet and the yield may be shown as zero as a result.

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Tritax EuroBox’s stated dividend aim is 4.75%, and Aberdeen Standard Euro Logistics Income is 5.5%, so I have used those in the table above, but I haven’t checked the other zero payers to see if they have declared similar dividend targets.

The hunt for yield

It’s not surprising to see some big yields in the table above. The average yield across all these new investment trusts is 3.4%, but if you strip out the non-dividend payers, the remaining 18 offer an average of 5.2%.

The two sectors that seem to be dominating are UK property and debt financing. The former is perhaps a little surprising, given the big discount to net assets that sector giants like British Land and Land Securities trade on at the moment, but we can see it’s the specialist property areas attracting the money, such as big box warehouses, social housing and supermarket properties, rather than generalist operators.

Also popular right now, sector-wise, are smaller companies and renewables, both of which have had pretty good runs recently.

What’s out of favour?

It’s noticeable that country specialists are thin on the ground, with Baillie Gifford US Growth and Asoka India being the exceptions. The latter listed last week but failed to reach even half of its fundraising target of £100m.

I remember that when I first started getting interested in investment trusts back in the 1990s, Asia Pacific funds were all the rage, and you couldn’t read an article in the press without someone recommending a fund covering that region. But the Far East is noticeable by its absence.

Finally, with the reasonable chance of a Labour government in office sometime soon, infrastructure investment trusts seem to be lying pretty low.

Buying what’s hot

I inclined to think that lists like this can act as a decent contrary indicator, as they can flag up areas to be wary of and for potential research.

That said, I might take a look at the Debt sector, as I’m not really familiar with the investment trusts within it, and I’m curious to see how they have fared.

And I suspect I will take a look at Life Settlements, just to see what has happened to cause that to sink to such a massive discount in just a few months. As well as the A shares, there are also B, D and E shares, so it looks like a complex situation that may well end up in my ‘too hard’ box.

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