Booming demand for green infrastructure investments has helped power a record run of fundraising for UK investment trusts, with managers breaking the previous annual record for capital raising in the first nine months of 2021. UK investment trusts have raised £8.7bn in secondary fundraising so far this year, according to the Association of Investment Companies (AIC), already surpassing the previous 12-month record of £7.4bn set in 2019. Green investment trusts that invest in renewable energy infrastructure from wind farms to biogas and batteries pulled in the most cash, with more than £1.7bn raised, followed by other infrastructure-focused vehicles at £988m. Although fundraisings often tap institutional investors and wealth managers, there has also been a rise in direct retail participation as trusts throw open their offers to ordinary investors. The rapid pace of fundraising highlights the robust appetite for green-tinted investments, and how investment trusts have gained popularity as a vehicle to invest in alternative assets. Income-conscious investors are also lured by the attractive yields on offer in the sector, according to managers. Investment trusts, a category of UK investment vehicles that are structured as listed companies, have proved useful to investors looking to tap long-term assets such as infrastructure. The structure allows investors to enter or exit their positions in the trust via the stock market while the trust company holds the underlying assets for the longer-term. In contrast, mutual funds generally need to buy and sell underlying assets to facilitate investors’ moves in and out of the fund, a set-up that makes it more difficult to back years-long projects such as battery storage, renewable power generation or energy efficient infrastructure. With the increasing trend for companies to remain private for longer it is likely that there will be continued demand for these types of investment trusts, commentators believe. As they are highly unlikely to be able to invest in these companies directly, one of the best ways to access these illiquid assets is through investment trusts.
House price rises
House prices registered the strongest monthly rise for 14 years in September, pushing the average cost of a home to a record high and reversing a three-month decline in annual growth. Halifax, one of the country’s biggest mortgage lenders, said last month the average cost of a home rose by 1.7%, or £4,425, to £267,587. The previous peak was £263,162 recorded in August. The average house price is now as expensive as it ever has been. The annual rate of house price inflation rose to 7.4% from 7.2% in August, reversing a downward trend since hitting a peak of 9.6% in May. Prices are up by more than £18,000 since last September and close to £28,000 higher than last June when the housing market reopened after the first Covid lockdown. A number of factors are affecting house price growth, given that most mortgages agreed in September would not have completed before the government ended the stamp duty holiday in England. The ‘race for space’ as people changed their preferences and lifestyle choices undoubtedly had a major impact. Looking at price changes over the past year, prices for flats are up just 6.1%, compared with 8.9% for semi-detached properties and 8.8% for detached homes. Wales continues to experience the strongest house price inflation in any UK nation or region, climbing 11.5% in September to an average of £194,286. Scotland remains ahead of the national average at 8.3%, with an average house price of £188,525, while the Northern Ireland market rose 9.3% to £166,299. The south-west remains the hotspot in England, reporting 9.7% growth in September to an average of £276,226, as the trend towards more rural living in a more flexible and remote working environment continues. Greater London remains the nation’s growth laggard with house prices rising just 1%, albeit with the highest average price in the UK at £510,515. It was the only region to record a fall over the last three-month period (0.1%). Halifax warned the market could soften in the coming months as cost of living rises and tax increases gave buyers pause for thought. However, low borrowing costs and an improving labour market could keep the market buoyant.
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