In the last two years the words “global recession” and “credit crunch” have been indelibly marked onto the nation’s psyche. Britain has been in the longest recession in its history and the phrases have moved off the business sections to become front page news, gaining more column inches than any other subject in living memory.
Although we have spent the entire year in economic recession it has actually been a very successful period for investment companies and equity markets in general. The Morningstar Investment Trust (excluding Private Equity) Index is up 19.9% in net asset value (NAV) terms, shading the FTSE 100 index, which registered a gain of 19.4% as at December 21, 2009.
The Investment Trust index rise comes on the back of a 26.5% fall in 2008 and is the fourth most successful calendar year performance since the formation of the index in the mid 1990s. On a price total return basis things are even more encouraging; 2009 was the second highest returning year, up 34.9%.
The vehicles that enjoyed the highest returns--doubling their money in index terms--were those investing in the Latin America region or Country Specialists Europe funds. The latter's poorly-performing Irish fund constituent was pulled up by the very impressive JPMorgan Russian Securities, which registered a 160% rise in its assets--the highest of all the London-listed closed-end funds.
The highly geared Invesco Leveraged High Yield, Geiger Counter which invests in the Uranium industry and Gervais William’s Gartmore Fledgling were the other non-AIM listed trusts which registered triple-digit returns.
Other successful sectors were Emerging Markets both in Europe and globally, Technology/Media/Telecoms and UK Smaller Companies all returning over 50%.
There were losers, but they were few and far between. The Direct Property and Private Equity sectors continued to suffer terribly, losing around 30% of their NAVs. Those specialising in Financials, Endowment Policies and Japanese equities also saw their values fall over the period but to a smaller degree.
Discounts narrowed over the year, so investors enjoyed the double whammy effect of this coupled with the rising markets. Those who were geared up fared even better. The Morningstar Investment Trust Index, which excludes VCTs and AIM-listed funds, started the year on a 19.7% discount. This has come right in to a 12.1% discount, meaning an extra Christmas present for all those who have been invested in closed-end funds in 2009.
