In the investment company world, more than half of new launches were in specialist sectors, as has been the trend in recent years; namely debt, infrastructure and forestry. Income was the dominant theme for launches, not surprising in this low interest rate, inflationary environment.
The top performer of the year was also a company with a specialist mandate. Greenwich Loan Income, which is listed on the AIM and invests in debt secured against small- to medium-sized technology companies, boasted a 56 per cent increase in share-price performance to the end of December. Even more impressive, a £100 investment in the company three years ago would have been worth £433 at the end of December.
The next top performer – El Oro, which was up 53 per cent – also belongs to a niche sector, Specialist Sector: Commodities and Natural Resources. Companies from the Private Equity and Global Smaller Companies sectors also featured among the top performers, showing that this was the year for considering specialist investment strategies. Although specialist sectors dominated performance tables, investors should still do their research before investing – companies in these sectors featured near the bottom of the tables too.
Five top-performing trusts in 2011*
| Fund | Sector |
1-yr returns (%) |
3-yr returns (%) | 5-yr returns (%) |
| Greenwich Loan Income (AIM) | Sector Specialist: Debt |
156.11 |
432.72 |
62.44 |
| El Oro | Sector Specialist: Commodities and Natural Resources |
152.07 |
N/A |
N/A |
| Northern Investors | Private Equity |
136.68 |
276.16 |
147.86 |
| Marwyn Value Investors | Global Smaller Companies |
134.06 |
566.94 |
130.83 |
| Real Estate Credit Investments | Sector Specialist: Debt |
132.9 |
240.86 |
17.22 |
Source: The AIC
Against such a tough back-drop, 2012 got off to a positive start, with the market slightly up at 5,668 points, from a 5,572 close at the end of 2011. A decisive 96 per cent of managers predict that volatility will continue throughout the next year, but encouragingly, 71 per cent are optimistic that markets will ultimately go up.
So will specialist sectors perform well again this year? Of the managers we polled in our end-of-year fund survey, one in five believed that blue chips would prove the best stocks for 2012. However, 8 per cent put their faith in biotechnology, while a further 8 per cent opted for technology as the sector most likely to outperform next year.
David Pinniger, manager of International Biotechnology Trust, said: "In a challenging economic and market environment, the risk-reward profile of backing innovation improves dramatically. Investors should be looking to invest in highly innovative sectors when the end markets are fundamentally insulated from the economy. Biotechnology is one such area – a global growth industry that is delivering an incredible new product cycle."
With so many issues affecting the global economy, the next 12 months look far from certain, although the London Olympics and the golden jubilee should at least add some light relief. The closed-ended structure of the investment company sector means it is in a better position than most to weather any uncertainties that lie ahead.
Jemma Jackson is PR manager at the Association of Investment Companies. The views expressed here are her own.
*Excluding VCTs (share price total return on £100, less 3.5 per cent expenses, to 31 December 2011).