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 trust | Sector | Launched | Mkt cap £m | Yield % | +Prem/ -disc |
|---|---|---|---|---|---|
| ScotGems | Global Smaller Companies | Jun-17 | 48 | – | -7 |
| Odyssean IT | UK Smaller Companies | May-18 | 92 | – | 7 |
| Aberforth Split Level Income | UK Smaller Companies | Jul-17 | 189 | 4.0 | -5 |
| Downing Strategic Micro-cap | UK Smaller Companies | May-17 | 51 | – | 2 |
| Baillie Gifford US Growth | North America | Mar-18 | 236 | – | 4 |
| Jupiter Emerging & Frontier Income | Global Emerging Markets | May-17 | 98 | 5.5 | 2 |
| Ashoka India | Country Specialist | Jul-18 | 48 | – | 5 |
| JP Morgan Multi-Asset | Flexible Investment | Mar-18 | 88 | 4.2 | -5 |
| CIP Merchant Capital | Flexible Investment | Dec-17 | 49 | – | -4 |
| PRS REIT | Property Direct – UK | May-17 | 517 | 4.4 | 6 |
| LXI REIT | Property Direct – UK | Feb-17 | 218 | 5.0 | 5 |
| Tritax EuroBox | Property Direct – Europe | Jul-18 | 300 | * 4.8 | 3 |
| Aberdeen Standard Euro Logistics Income | Property Direct – Europe | Dec-17 | 194 | * 5.5 | 4 |
| Warehouse REIT | Property Specialist | Sep-17 | 167 | 6.0 | 0 |
| Triple Point Social Housing REIT | Property Specialist | Aug-17 | 214 | 3.5 | 7 |
| Supermarket Income REIT | Property Specialist | Aug-17 | 189 | 5.4 | 6 |
| Residential Secure Income REIT | Property Specialist | Jul-17 | 170 | 2.7 | -2 |
| AEW UK Long Lease REIT | Property Specialist | Jun-17 | 73 | 3.4 | 0 |
| Impact Healthcare REIT | Property Specialist | Mar-17 | 198 | 5.8 | 3 |
| Marble Point Loan Financing | Debt | Feb-18 | 212 | 7.8 | 5 |
| Fair Oaks Income 2014 | Debt | Apr-17 | 46 | 8.4 | 9 |
| BioPharma Credit | Debt | Mar-17 | 951 | 5.2 | 4 |
| TOC Property Backed Lending | Debt | Jan-17 | 28 | 6.8 | 7 |
| Gore Street Energy Storage | Renewable Energy | May-18 | 31 | – | 2 |
| Greencoat Renewables | Renewable Energy | Jul-17 | 293 | 5.5 | 14 |
| Life Settlements A | Insurance & Reinsurance | Mar-18 | 68 | – | -27 |
| Tufton Oceanic Assets | Leasing | Dec-17 | 96 | – | 3 |
| Augmentum Fintech | Tech Media & Telecomm | Mar-18 | 96 | – | 3 |
| EJF Investments | Financials | Apr-17 | 110 | 5.5 | 3 |
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.
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.