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Association of Investment Companies publishes top 20 companies by country exposure

News Team, 15/10/2019

The Association of Investment Companies (AIC) has published its list of the 20 investment companies with the most countries represented in their portfolios, with F&C (1st) and Witan (2nd) topping the table. The portfolios of the two global sector companies are diversified across 37 and 36 different countries respectively.

Rounding off the top five are Genesis Emerging Markets (3rd) which is invested in 32 countries, Aberdeen Emerging Markets (4th) and Utilico Emerging Markets (5th) both with exposure to 26 countries.

Investment companies from global emerging markets and global sectors make up the biggest proportion of the list, representing 12 of the top 20. They are not however, the only sectors with significant diversification by country. Specialist investment companies in the environmental and financials sectors such as Polar Capital Global Financials (11th), Jupiter Green (17th), Impax Environmental Markets (18th) also appear in the top 20.

Commenting on the rankings, Andrew Bell, chief executive officer of second-placed Witan, said: “Diversifying internationally is a way to control investment risk (especially if you live in a mature economy with a historically declining currency, such as the UK). However, the objective of equity investment is to deliver the fruits of economic growth – diversification helps to reduce investor nerves in troubled times but shouldn’t be the driving force. Witan’s aim in investing is to find companies worldwide whose growth prospects and valuation offer attractive returns for our shareholders, in terms of rising dividends and capital growth.”

Mr Bell additionally noted current economic concerns, but argued that the situation was not irregular from a historical context.

He said: “At present, concerns over Brexit, US-China trade relations and conflict in the Middle East are depressing economic confidence and have encouraged a lemming-like rush into government bonds yielding less than diddly-squat. The risks are real and things might go horribly wrong, but they might not. Today’s worries seem no worse than the tribulations of the Cold War or past periods of rising interest rates or oil prices. Following the 2008 financial crisis banks are more tightly regulated and better capitalised, interest rates are low and, on average, declining, and there is now an increasing switch towards looser fiscal policy, which ultra-low borrowing rates have made financeable and therefore tempting for politicians.”

Concluding with a forecast for the markets, he added: “At some point, markets are likely to shift their focus from the depressive effects of current policy conundrums towards the monetary and fiscal policy response. If you focus on the rear-view mirror or the rain hitting the windscreen you are likely to collide with a lamp post. In investing, as in driving, it pays to look ahead if you want to make progress.”

Annabel Brodie-Smith, communications director of AIC, summarised the table by emphasising the value in spreading exposure across multiple regions.

She said: “With the news bringing more reasons to worry than to celebrate, many investors might take comfort from knowing their investments are spread across a wide range of different countries. The ability to spread your investment across a variety of companies, countries and sectors is one of the biggest benefits of collective investments, such as investment companies. Different countries will have varying economic and political environments as well as different strengths and weaknesses, so investing in a good spread of regions can make sense.

Talking about the table’s results, she concluded: “It’s not surprising to see big, global investment companies top the list, investing in as many as 37 different countries. However, it’s interesting that some investment companies with strong sector specialisms, such as environmental or financials, are so diversified by country.”

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