Investment company liquidity – steady as she goes, but could be better

19 Mar 2024 / Corporate research


  • Liquidity is the lifeblood of equity markets.
  • Following the events at the Woodford Equity Income Fund (WEIF), in 2019, professional investors, increasingly, focus on liquidity when making investment decisions.
  • Hardman & Co is employed to analyse liquidity by Authorised Corporate Directors, Depositaries, stock exchanges and for court cases. We have published a number of publicly available reports on liquidity data.
  • This report builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space.
  • We analyse liquidity for ICs as a whole, compare traditional with alternative ICs, interrogate the data in market capitalisation (MCap) baskets and, finally, by AIC sector.
  • Liquidity for ICs has not seen the sharp decline experienced by quoted trading companies. However, typically, it is lower than that for trading companies.
  • Having noted the steady liquidity across time for the IC space as a whole, our work does show that there seems to have been a decline in that for the smallest ICs; this is part of the pressure on these boards, forcing mergers.
  • Finally, we consider the consequences of falling liquidity and outline some suggestions to help IC teams improve liquidity in their shares to become more attractive to investors; many have recognised the positive impact that sponsored research can have.

Watch Keith discussing the report here.

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