The investment trust sector is on track to see the largest number of IPOs for strategies investing in traditional listed equities since 2007, in what could be a bumper year for the industry.
But alternatives launches continue to attract significant support, including the biggest fundraise so far this year.
There has been a resurgence in listed equity trust IPOs in 2018, with eight up and running so far - amounting to a total fundraising of just over £1bn - with at least another two prospective launches in this space to come.
This compares to four out of 15 launches in 2017 and just two out of four the year before. In total, 12 trusts have launched so far this year, with another nine slated for IPO by the end of 2018.
If these all come to fruition, this year could see the highest number of new trust launches since 2007, which saw a record 33 IPOs.
A number of well-known names have unveiled closed-ended vehicles investing in listed equities so far this year. These include the Mobius Investment Trust which launched last month, while Terry Smith's Fundsmith is fundraising for its new Smithson trust.
However, while there has been an uptick in the number of traditional mandate launches, Simon Crinage, head of investment trusts at J.P. Morgan Asset Management, highlighted they have a unique selling point.
For example, the Smithson trust, which increased its fundraising target from £250m to £600m due to high investor demand, will have a global small- and mid-cap focus while AVI's Japan Opportunity trust will take a value approach to Japanese equities.
He said: "These mandates offer something unique and utilise the benefits of the permanent capital structure that a closed-ended vehicle can offer, whether that is through some form of income enhancement, liquidity or a concentrated portfolio. They need to justify why they are a trust and not an OEIC."
Yet despite an increase in the number of trusts coming to market in 2018 compared to previous years, Crinage also noted most IPOs have failed to reach their targets, including JPMAM's own Multi-Asset trust, which launched in March.
"We fell short of our fundraise as we wanted over £100m but ended up with £93m. Fundraising was tricky in H1 but the runway is getting busier now," he said.
Commenting on this year's launches, Simon Elliott, head of research at Winterflood Securities, added: "The equity mandate has made a bit of a comeback this year and it will be really interesting to see how the latest wave of new issues fares.
"For example, while £100m was clearly less than Mobius Capital Partners was targeting [£200m], I think it was a decent result given the performance of emerging markets in general this year, considerable macro worries and the fact that a number of well-established EM trusts are trading on double-digit discounts.
"It will be interesting to see whether the other IPOs are successful, although it is certainly true that investors are spoilt for choice at present."
Meanwhile, fundraising for the investment trust sector through secondary issuance has been £3.1bn in 2018 so far to 1 October, compared to £3.3bn for the first half of 2017, according to the Association of Investment Companies (AIC) data.
John Spedding, head of investment trusts at Schroders, commented: "We are certainly seeing strong retail demand, though that could be a slightly lagged reaction from the move to more freedom on pensions. Nonetheless, we have definitely noticed a strong retail bias towards closed-ended funds."
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