The Association of Investment Companies (AIC), in association with Moneywise, is offering readers the chance to win £3,000 to invest in the investment company of their choice.
Investment company assets topped a record £202 billion at the start of the year and today there are hundreds of investment companies to choose from. But how do you decide if an investment company is right for you? And how should you choose one? This very much depends on you. Are you looking for income or for capital growth, or perhaps a combination of the two? And what is your attitude to risk?
Strong long-term performance While past performance is not a guide to future returns, it is something to be considered. When looking at performance data, it makes sense to look at a variety of time periods and also to look at performance for individual years to give a clearer picture of how a company has performed in different market conditions.
Investment companies cover a diverse range of assets and the AIC provides a wealth of information to help investors along the way. The AIC’s website, Theaic.co.uk, offers performance data, as well as information on gearing (borrowing), discounts/premiums, dividends, charges, portfolio and management information. You can even download the latest factsheet and annual report of an investment company.
Innovation The closed-ended investment company structure lends itself well to innovation, as the growth of specialist sectors in areas such as infrastructure, renewable energy, healthcare and specialist property demonstrates. In addition, some companies are using innovative investment strategies which are difficult to replicate elsewhere, such as in private equity and venture capital trusts (VCTs). If you are looking for a company that is a little bit different, the investment company sector offers a good deal of choice. But there are plenty of more mainstream investment companies too, investing in areas such as UK or global equities.
Income The investment company sector has an unrivalled dividend track record. This is because investment companies have the flexibility to retain up to 15% of the income they receive each year and squirrel it away for the leaner years. Known as ‘dividend smoothing’, this has enabled many investment companies to increase their dividends through both good and bad times. There are 21 ‘dividend hero’ investment companies that have increased their dividends each year for 20 years or longer. There are even four dividend heroes that have consecutively increased their dividends for 50 years or more.
Durability Investment companies have been around since 1868. The past 152 years have seen two World Wars, the Great Depression, the tech boom (and bust) and the 2008/9 financial crisis. We never know what is around the corner, but investment companies’ 152 years of history demonstrate the strength and durability of the investment company structure, which is just as relevant for today’s investors.
For more information on investment companies, visit Theaic.co.uk
HOW TO WIN
To enter the competition, simply answer the question and enter your contact details to the form below.
TERMS & CONDITIONS: Issued by the Association of Investment Companies (AIC). All entries to this competition must be received by 31 March 2020. The winner will be the first correct entry drawn at random following the closing date for entries. The winner’s prize will be paid by bank transfer only. Only one entry per person is admitted. This offer is only open to UK residents aged 18 years or over and excludes employees of the AIC, connected companies, their agents or families, or anyone connected with the competition. Entry from competition bots will be excluded. The judge’s decision is final. Investment companies are equities whose value can go down as well as up and you may not get back the full amount invested. Past performance is not a guide to future performance. If you are in any doubt about whether an investment company is suitable for you, please consult a financial adviser. The Association of Investment Companies (AIC) would like the opportunity to contact you by email to send you its investment company newsletter, Compass. Please read the options on the reader reply card at the front of the magazine or at Moneywise.co.uk/competitions and tick where appropriate.