Deutsche Numis Investment Companies: Analyst Best Ideas Conference
Deutsche Numis’ well-attended 2024 Analyst Best Ideas Conference took place last week and was a great opportunity to hear from our investment companies team, including Ewan Lovett-Turner, Colette Ord, Gavin Trodd, Andrew Rees and Ash Nandi, who were keen to share their top picks and unique sector insights with an engaged investor audience.
The team kicked off with an overview of the investment companies’ space, where we are seeing discounts at their widest levels since the post-GFC (Global Financial Crisis) era. While equity investment companies are trading on relatively wide discounts to their 10-year levels, Ewan pointed to the de-rating in the alternative income asset class and private equity as being particularly significant.
Over the past few years, there has been a material change in the level of issuance, with approximately £430m this year, as compared with approximately £1.2bn the year before, and an average of approximately £9.5bn in the five years prior to that.
This is reflected in the fact that 85% of the universe is trading on a 5% or wider discount, with 60% on a 10% or wider discount, so the prospect of issuance increasing meaningfully in the short-term appears unlikely.
The team then considered the changing investment interest in this sector, with significant outflows from multi-asset funds and retail investors since 2021, along with consolidation in the wealth management space leading to some outgrowing the investment companies’ sector.
Looking ahead for the investment companies’ sector, it seems likely that consolidation, particularly among smaller funds, will continue to be a feature, with funds needing to think about more than simply reinvigoration, but also whether they have trading liquidity, marketing expertise and are the right size to appeal to a wide range of investors.
New buyers to the sector are largely made up of:
• Companies – buybacks are at near record levels. • Value players – some are taking meaningful stakes, signalling the potential available value in the space. • Retail investors - there is some scope for strongly performing funds to attract this group. • Strategic buyers – M&A has picked up, including take-privates.
The team then gave a deeper dive into the appeal of various asset classes for different portfolios, including equity investment companies, infrastructure, private equity and property, ultimately highlighting that delivering on expected return profiles likely to be the key to attracting widespread buyers back into the sector.
Find out more about our investment companies’ offering here: funds.numis.com.
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Deutsche Numis’ well-attended 2024 Analyst Best Ideas Conference took place last week and was a great opportunity to hear from our investment companies team, including Ewan Lovett-Turner, Colette Ord, Gavin Trodd, Andrew Rees and Ash Nandi, who were keen to share their top picks and unique sector insights with an engaged investor audience.
The team kicked off with an overview of the investment companies’ space, where we are seeing discounts at their widest levels since the post-GFC (Global Financial Crisis) era. While equity investment companies are trading on relatively wide discounts to their 10-year levels, Ewan pointed to the de-rating in the alternative income asset class and private equity as being particularly significant.
Over the past few years, there has been a material change in the level of issuance, with approximately £430m this year, as compared with approximately £1.2bn the year before, and an average of approximately £9.5bn in the five years prior to that.
This is reflected in the fact that 85% of the universe is trading on a 5% or wider discount, with 60% on a 10% or wider discount, so the prospect of issuance increasing meaningfully in the short-term appears unlikely.
The team then considered the changing investment interest in this sector, with significant outflows from multi-asset funds and retail investors since 2021, along with consolidation in the wealth management space leading to some outgrowing the investment companies’ sector.
Looking ahead for the investment companies’ sector, it seems likely that consolidation, particularly among smaller funds, will continue to be a feature, with funds needing to think about more than simply reinvigoration, but also whether they have trading liquidity, marketing expertise and are the right size to appeal to a wide range of investors.
New buyers to the sector are largely made up of:
• Companies – buybacks are at near record levels.
• Value players – some are taking meaningful stakes, signalling the potential available value in the space.
• Retail investors - there is some scope for strongly performing funds to attract this group.
• Strategic buyers – M&A has picked up, including take-privates.
The team then gave a deeper dive into the appeal of various asset classes for different portfolios, including equity investment companies, infrastructure, private equity and property, ultimately highlighting that delivering on expected return profiles likely to be the key to attracting widespread buyers back into the sector.
Find out more about our investment companies’ offering here: funds.numis.com.