Three industry experts give their thoughts on the best performing companies that have not paid a dividend over five and ten years.
Annabel Brodie-Smith, AIC communications director
While income has been a top priority in recent years, growth will still be the main goal for many investment company shareholders. It may be tax-efficient for some investors not to receive dividends and to focus purely on capital returns.
It is fitting that the best-performing investment companies are invested in technology and smaller and unquoted companies. This is because the closed-ended structure, which allows investment companies to invest in smaller, less liquid investments, helps to deliver strong long-term performance.
Walter Price, portfolio manager of the Allianz Technology fund
We invest in some mature tech companies that pay dividends like Apple, but most of our companies are still high-growth and many are recovering from an inventory cycle last year in components and China trade.
For the coming year, the median earnings growth of our holdings is 31%, far faster than the growth in the market.
We believe these companies should be building out their infrastructure with additional sales and support employees to continue this growth and sustain their positions as the future infrastructure for the world.
As their sales slow down, these companies can then focus on shareholder capital return, either by paying a dividend or by purchasing more shares than they are issuing.
But by doing so now, they would stay as much smaller companies rather than reaching their potential.
Praveen Kumar, manager of the Baillie Gifford Shin Nippon fund
Since the launch of Shin Nippon in 1985, our investment philosophy has remained consistent. We seek to invest in the most dynamic of smaller companies in Japan that have the potential to grow rapidly for at least five to ten years.
These businesses are typically founded and managed by young, entrepreneurial individuals who are willing to take short-term risks in return for long-term success.
This, in essence, captures the spirit of Shin Nippon. We invest in companies with a view of generating attractive returns for our shareholders in the long run.
Given the immaturity of the businesses that we invest in, and the inherent volatility in their shares, we are prepared to tolerate periods of weak performance without compromising on our investment philosophy that has served patient shareholders well over the long term.
Japan continues to be a fertile hunting ground for exciting and fast-growing smaller businesses that have the potential to become world-class companies.
Given the widening pool of such businesses amid changing attitudes towards risk-taking in Japan, we remain excited with the investment opportunities that are becoming available to us.
Top performers over five years which have not paid a dividend
Top performers over ten years which have not paid a dividend
New data from the Association of Investment Companies (AIC) reveals which are the top-performing investment companies which have not paid a dividend over five and ten years.
New data from the Association of Investment Companies (AIC) reveals which are the top-performing investment companies which have not paid a dividend over five and ten years. Allianz Technology, from...