Investment trust association highlights performance

Latest independent research from iPEIT shows benefit of investing in quoted private equity investment trusts as part of a balanced portfolio.

iPEIT, the Initiative for Private Equity Investment Trusts formed in 2006, has published independent research showing that private equity trusts have outperformed the FTSE-All Share index over one, three five, 10 and 15 years to the end of March.

They also have a lower risk-return profile than the investment trust sector as a whole and than the FTSE-All Share and MCSI World indices.

Ian Armitage, head of HgCapital and an iPEIT steering committee member, said “The risk return charts correct a widely held misperception that listed private equity is high risk.  They show that, over the medium term, which is how the FSA suggests volatility be viewed, PEITs have provided higher returns with less risk than other Investment Trusts and UK and global equities.”

Comparing the iPEIT trusts to the FTSE-All Share, Fundamental Data, a research house, found the trusts’ total return, based on share price, was 102 percent. In contrast, the FTSE All-Share total return was 62.3 percent. The trusts’ volatility was also lower.

The gap in risk return profiles is even more striking over five years, where the trusts’ total return was 136 percent with a volatility of 9; the FTSE All-Share total return was 56.6 percent but with a volatility of 15.6, showing that UK equities were much riskier, as defined by volatility, than the trusts.   

iPEIT has also improved the availability of in-depth information on each of its ten members using Fundamental Data’s daily fact sheets, previously only available through subscription.

Bear Stearns Private Equity, which manages a quoted fund of funds, last week became the latest investment trust to join the association.