Demand for investment trusts remains resilient in Q2 despite market turmoil
Update
Purchases of investment companies on adviser platforms remained resilient in the second quarter of the year, despite market turbulence, according to data by the Association of Investment Companies and compiled by ISS Financial Clarity.
Investors poured £361m of cash into investment trusts during the last quarter, 20% higher than in the same quarter last year and the second-highest quarterly figure on record. This was matched by net demand of £151m, also the second-highest figure ever recorded.
Despite the market drop in the first half of the year, there were purchases of £700m between January and June, the highest level ever in a six-month period.
The AIC Flexible Investment sector, which is home to investment companies investing in a range of asset classes, was the most popular over the period with 17% of purchases, while the Global sector, which had occupied the top spot for purchases during the five years, fell to second place with 13% of purchases.
The UK Smaller Companies sector was also popular, making up 7% of purchases, followed by Property, with UK Commercial making up 6% and both UK Equity Income and Infrastructure each making up 5%.
"The healthy level of demand for investment companies during some difficult months in the market shows that advisers and wealth managers are taking a long-term perspective," said Nick Britton, head of intermediary communications at the AIC. "Historically, market downturns have been great times to buy investment companies, though that is not to say things won't get worse before they get better."
The fact that there was a strong showing for sectors trading on wider-than-usual discounts, such as UK Smaller Companies, suggests some buyers "may have been shopping for bargains", Britton noted.
The number of wealth managers in the investment trust market reached 50 over the period, a five-year high while the number of firms purchasing investment companies on adviser platforms topped 1,903, including 1,756 advice firms.
The robust demand for investment companies in the second quarter of the year defied a general decline in total platform purchases. All product purchases on adviser platforms decreased to £48.93bn in the second quarter, 5% less than in the same period last year.