The Queen celebrates 90 years: Investment company sector continues to thrive

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Figures from AIC show that 10% (27 by number) of conventional members have been around for 90 years or longer and continue to thrive.

Of these, nearly half are featured in the AIC’s dividend heroes list – companies that have increased their dividends for 20 years or more.

On the 21st April the world’s oldest reigning monarch and Britain’s longest reigning monarch, Queen Elizabeth II, celebrates her 90th birthday.

A queen is born, investment trusts move into equities

According to John Newlands in his book ‘Put Not Your Trust In Money’, which was published by the AIC, by the 1920s, the decade in which the Queen was born, “many investment trusts were starting to shift the balance of their investments away from purely fixed interest portfolios and into equities.” Some of these names look less than familiar today, however. For example, Foreign & Colonial Investment Trust’s first industrial investments included Liebig’s Extract of Meat, Swedish Match and Texas Gulf Sulphur, which were bought in 1926.

One extract from Newlands’ book about the early investment trusts holds particular resonance to this day: John Newlands writes: “It is essential to realize that investment, until the turn of the 20th century, and beyond, was all about income, rather than capital growth.  Interest rates were low, and inflation negligible…investors had very few options….”

Foreign and Colonial Investment Trust is the oldest company in the investment company sector (148 years) whose original aim was to help the ‘investor of moderate means’ have ‘the same advantage as the large capitalist in diminishing risk in Foreign & Colonial stocks by spreading the investment over a number of stocks’. However, as well as the Queen’s 90th birthday, 2016 also sees the 90th anniversary for both Finsbury Growth & Income and Temple Bar.

Finsbury Growth & Income was launched on 15 January 1926 as the Scottish Cities Investment Trust, and remains Scottish domiciled today, despite being managed from London. By 1958 Finsbury Growth & Income had net assets of approximately £1m, which grew to £3.3m by 1968 and to £24m by 1990. The net asset value now exceeds £780m (as at end of March 2016).

Temple Bar launched in 1926 as The Cable, Telephone and General Trust Company Ltd and since then has confronted the Great Crash of the 1930s, the inflationary 1970s and subsequent periods of equity market strength and weakness. Today, its total assets are over £800m (as at end of March 2016).

Commenting on the longevity of investment companies John Newlands, Head of Investment Trust Research at Brewin Dolphin Ltd said: “The fact that a number of investment trusts had already been operating for decades when the Queen was born – and continue to trade today – shows that far from being old-fashioned, they have evolved and improved with the times. If they hadn’t they would have faded away, as have so many once famous large UK companies from Marconi to Woolworths. I would add that the long-term compound investment returns of many of these veteran investment trusts are not to be sneezed at, either.”

Annabel Brodie-Smith, Communications Director at the Association of Investment Companies said: “It is a testament to the sector that 10% of investment companies have been around for the 90 years since the Queen was born or in many cases a good deal longer. Investment companies have weathered wars, booms and busts and they are still continuing to deliver strong long-term performance to their shareholders today. Long-term investing doesn’t get much more long-term than this.”

Investment companies 90+ years old

Company Management group AIC sector Total assets (£m) Launch date
Foreign & Colonial Investment Trust F&C Management Global 2,878.32 01/01/1868
Scottish American Baillie Gifford Global Equity Income 434.92 31/12/1873
Dunedin Income Growth Aberdeen Asset Managers UK Equity Income 434.92 01/02/1873
JPMorgan American J.P. Morgan Asset Management North America 899.23 18/06/1881
Mercantile J.P. Morgan Asset Management UK All Companies 2,012.39 08/12/1884
Scottish Investment Trust Scottish Investment Trust Global 790.77 27/07/1887
Henderson Smaller Companies Henderson Global Investors UK Smaller Companies 570.00 16/12/1887
JPMorgan Overseas J.P. Morgan Asset Management Global 298.12 21/04/1887
Alliance Alliance Trust Global 3,243.92 21/04/1888
Bankers Henderson Global Investors Global 765.40 13/04/1888
Merchants Allianz Global Investors UK Equity Income 604.94 16/02/1889
F&C Global Smaller Companies F&C Management Global 564.95 15/02/1889
Law Debenture Corporation Law Debenture Corporation Global 731.68 12/12/1889
Edinburgh Investment Invesco Asset Management UK Equity Income 1,576.54 01/03/1889
City of London Henderson Global Investors UK Equity Income 1,333.96 01/01/1891
BlackRock Income Strategies BlackRock Investment Management (UK) Flexible Investment 420.58 05/01/1898
British Empire Asset Value Investors Global 747.82 01/01/1898
TR Property Thames River Capital (UK) Property Securities 1,156.58 05/05/1905
Witan Pacific Witan Investment Services Asia Pacific – Including Japan 173.05 30/12/1907
Murray International Aberdeen Asset Managers Global Equity Income 1,335.54 18/12/1907
Witan Witan Investment Services Global 1,784.37 17/02/1909
Scottish Mortgage Baillie Gifford Global 3,791.90 01/01/1909
London & St Lawrence London & St Lawrence Global Equity Income 101.10 07/03/1910
Hansa Trust Hansa Capital Partners Global 251.06 01/01/1912
Murray Income Aberdeen Asset Managers UK Equity Income 535.97 07/06/1923
Finsbury Growth & Income Frostrow Capital UK Equity Income 785.69 30/12/1926
Temple Bar Investec Asset Management UK Equity Income 859.40 30/12/1926

Source: AIC using Morningstar (as at 31 March 2016)

Share price total return £100 lump sum over 25 years

Company AIC sector SPTR 25yr
Overall weighted average ex VCTs 901.76
Foreign & Colonial Investment Trust Global 845.57
Scottish American Global Equity Income 579.81
Dunedin Income Growth UK Equity Income 571.92
JPMorgan American North America 1080.49
Mercantile UK All Companies 1622.41
Scottish Investment Trust Global 651.99
Henderson Smaller Companies UK Smaller Companies 643.73
JPMorgan Overseas Global 741.94
Alliance Global 743.30
Bankers Global 1,091.39
Merchants UK Equity Income 675.41
F&C Global Smaller Companies Global 1,536.91
Law Debenture Corporation Global 1,404.20
Edinburgh Investment UK Equity Income 755.01
City of London UK Equity Income 863.47
BlackRock Income Strategies Flexible Investment 474.94
British Empire Global 1,348.83
TR Property Property Securities 1,852.58
Witan Pacific Asia Pacific – Including Japan 357.21
Murray International Global Equity Income 1,033.72
Witan Global 865.59
Scottish Mortgage Global 1,426.67
London & St Lawrence Global Equity Income 782.26
Hansa Trust Global 1,248.81
Murray Income UK Equity Income 736.76
Finsbury Growth & Income UK Equity Income 1,719.68
Temple Bar UK Equity Income 1,108.88

Source: AIC using Morningstar (as at 31 March 2016)

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