How to research investment companies Annabel Brodie-Smith, Communications Director, AIC © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Do you currently recommend investment companies? © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Alien? Scary? © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Alien? Scary? © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Performance to end of August 2012 Duration Average investment company (3.5% deduction for charges) Average unit trust offer to bid 1 year 3 year 5 year 10 years 18 years 21 years 98 127 105 244 327 533 103 122 113 192 277 431 www.theaic.co.uk © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Gearing • A way to magnify returns to shareholders • AIC revising gearing data and descriptions - changes to improve understanding of past, present and future gearing www.theaic.co.uk © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Gearing Examples – End August • Average gearing for investment company sector – 6% • Most geared sector – Property Direct Europe – 188% • Least geared sector – Infrastructure - holding cash 8% cash www.theaic.co.uk © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Charges • Ongoing charges not TERs • Performance fees also available on website • Variety of charges according to type of sector and company • Global Growth sector average - 0.84% inc perf fee • Commodities & Natural resources – 1.58% inc perf fee • Private Equity – 2.35% inc perf fee www.theaic.co.uk © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Discounts/Premiums • Reflects supply and demand for sector/company • Why is this company at a discount/premium? • Discount volatility – addressed via discount control mechanism • Average discount -9% • Property Direct Europe -44% • Infrastructure +8% www.theaic.co.uk © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Sustainability of Income • Investment trusts can retain up to 15% of income each year • Open-ended companies have to distribute all their income • Allows investment companies to smooth dividends and pay them when times are tough www.theaic.co.uk © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Dividend Heroes Company Sector Consecutive years of dividend increase City of London Investment Trust UK Growth & Income 46 years Bankers Global Growth 45 years Alliance Trust Global Growth 44 years Caledonia Investments Global Growth 44 years F&C Global Smaller Companies Global Growth 41 years Foreign & Colonial Global Growth 40 years Brunner Global Growth 40 years © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Investment Trusts/Unit Trusts run by the same manager Investment Company OEIC Manager Schroder UK Growth Schroder UK Alpha Plus Richard Buxton Lowland Investment Company Henderson UK Equity Income James Henderson Temple Bar Investment Trust Investec UK Special Situations Alastair Mundy Edinburgh Investment Trust INVESCO Perpetual Income Neil Woodford Standard Life UK Sm Cos Standard Life UK Sm Cos Harry Nimmo Jupiter European Opps Trust Jupiter European Fund Alex Darwell BlackRock World Mining Trust BGF World Mining Evy Hambro © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Edinburgh Investment Trust vs INVESCO Perpetual Income • Edinburgh • INVESCO © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Information • Adviser Centre – www.theaic.co.uk • Training – online, seminars, bespoke • Adviser newsletter - Spotlight www.theaic.co.uk © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Alien? Scary? © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Alien? Scary? © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC. Disclaimer Any information contained in this presentation has been prepared for information purposes only. Whilst the AIC / AIC Information Services Limited has taken all reasonable steps to verify such information, it does not accept responsibility for any errors or omissions or for losses of any nature incurred by any person howsoever caused. The information contained in this presentation does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. This presentation may not be printed, reproduced or further distributed to any other person or published, in whole or in part, for any purpose. Please refer to http://theaic.co.uk/Important-information/ for further information relating to our disclaimer policy. The Association of Investment Companies (AIC) is a company limited by guarantee whose registered office is 9th Floor, 24 Chiswell Street, London. EC1Y 4YY. Its trading and registered office addresses are identical. The AIC is a company registered in England and Wales and its company registration no. is 4818187. The AIC is registered for VAT and its registration no. is 396992669. AIC Information Services Limited is a company registered in England and Wales with registration no. 01910539. © Association of Investment Companies 2012. This information is not to be distributed to, or used in connection with work on behalf of, an investment company which is not a member of the AIC, without the express permission of the AIC.