There will be new share issuance of £11.3 billion in listed investment companies over the next three years. Over two-thirds of this will be in companies involved in alternative investments.
According to Joachim Klement, head of investment research at asset manager Fidante Partners, the number of alternative investment companies launched in the last five and ten years was more than twice as high as that of equity investment companies.
The most popular alternative investment is in alternative credit, which is forecast to grow at 15.9 percent per annum for the next three years.
Infrastructure and renewables is the second most popular alternative investment, forecast to grow at 9.8 percent a year for the coming three years. It has grown at 19.4 percent over the last 10 years.
Mr Klement said: “While the performance of equities has been strong, the market has clearly been calling out for alternative investments. Alternative investment companies have been the major driver of new issuance in the UK listed investment company market accounting for more than 60 percent of new share issuance since the financial crisis. We expect this trend to continue in the near term.”
However not every alternative asset class is expected to be popular. Fidante Partners’ research predicts companies investing in commodities will see their size retract by 1.3 percent a year for the next three years.
Furthermore the appetite for hedge funds is also dwindling with companies investing in this class shrinking by 3.8 percent in the next three years.
Fidante Partners looked at a database of 713 investment companies, both current and defunct, listed on the London Stock Exchange and the Amsterdam stock exchange between January 2007 and March 2018.
The classifications as to what type of investment companies these were came from the Association of Investment Companies.
Fidante Partners is owned by Challenger Limited, an ASX-listed investment management firm and regulated life insurer with AUD 81.0 billion in assets under management as of 20 June 2018.