There will be new issuance of GBP11.3 billion in listed investment companies over the next three years with two thirds of this new issuance to occur in alternative investments, according to Joachim Klement (pictured), Head of Investment Research at Fidante Partners.
Klement says: “The number of alternative investment companies launched in the last five and ten years was more than twice as high as that of equity investment companies. So, while the performance of equities has been strong, the market has clearly been calling out for alternative investments. Alternative investment companies have been the major driver of new issuance in the UK listed investment company market accounting for more than 60 per cent of new share issuance since the financial crisis. We expect this trend to continue in the near term.”
Infrastructure and renewable energy funds were the main beneficiaries of the growth in alternative investment companies launching, in terms of new issuance – more than double the second-placed Alternative Credit sector, which nevertheless leads by the fastest increase in fund numbers.
Fidante Partners’s base case predicts a fall in the alternatives’ NAV growth rate from the 10 per cent average of the past 10 years to about 7 per cent, with equity growth continuing to outstrip it. Despite equities’ stronger growth, most of the new issuance would still be in alternatives.