Investment trusts launching initial public offerings (IPOs) in 2010 were in demand, with 13 trusts launched by the end of November.
Investment trusts – closed ended investment, incorporated as a company that will issue a limited number of shares – have raised around £1.42billion so far in 2010, with emerging market funds proving popular, JP Morgan Asset Management said.
The firm launched a Brazil trust and global emerging markets income trust, and said the China Special Situations trust launched by rival asset manager Fidelity had been in particularly strong demand.
Fidelity has announced the sale of further shares in the China Special Situations trust, convertible shares are being sold for 100p a share and will convert to ordinary shares at a conversion day, expected to be 25 February 2011.
JP Morgan said it was not surprising that emerging markets had been a key area for trusts as traditionally this form of investment had been a good way to invest in less liquid markets and riskier strategies.
The firm said that the range of trust launched had been quite diverse with infrastructure, distressed debt and commodities trusts. As well as initial strong demand the trusts had traded well after launch as well.
Trusts are seen as a suitable product for the changes brought about by the Financial Services Authority (FSA) Retail Distribution Review (RDR) which is seeking to bring transparency to the fees and charges on investments.
“The merits of natural transparency and attractive charging are driving client demand. When you add these benefits to the diverse opportunities which have already displayed success, if capital markets are open there are ground for further strong intial public offering activity in 2011 and we expect several more trusts with more distinctive mandates to be launched,” the firm said.
© Fair Investment Company Ltd