How popular capital preservation funds stand apart We compare Capital Gearing, Personal Assets, RIT and Ruffer
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here are dozens of different investment strategies, but most investors are largely looking to either build wealth for the long run or look after what they already possess. This latter objective is what capital preservation funds are designed to do. There are a handful of specialist investment trusts which fall under the capital preservation banner, including Capital Gearing Trust (CGT), Personal Assets Trust (PNL), RIT Capital Partners (RCP) and Ruffer Investment Company (RICA). Protecting your wealth is important when approaching or enjoying retirement, since your investments should hopefully provide the cash needed to pay the bills, keep the fridge stocked, cover healthcare costs, and ideally, allow you to go to a restaurant for a nice meal or to the theatre occasionally. GROWING IN POPULARITY Hellish global stock markets this year have seen an increasing number of investors drawn to investment opportunities with a blueprint to not lose money. ‘The relevance of capital preservation trusts has never been greater,’ says Duncan MacInnes, comanager of Ruffer. ‘We’ve been talking about the return of inflation and cross-asset correlations for two years and people thought we were a bit crazy.’ The topic now gets far less push back because you can see inflation for yourself in daily life, the manager says. Long-term performance figures show that Capital
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| SHARES | 07 July 2022
Gearing, Personal Assets, RIT and Ruffer have made investors money as well as stopping them from losing it. ‘We have an investment objective to protect and increase the value of shareholders’ funds over the long-term, in that order,’ says Troy Asset Management, which runs Personal Assets Trust. PRODUCT COMPARISON There are subtle differences between each trust. One of the most important is investment complexity, believes Ruffer’s MacInnes. Capital Gearing and Personal Assets inhabit the simple end of the ‘spectrum of complexity’, says the manager, in that their strategies are not difficult for most investors to understand. At the more complex end, there’s RIT and BH Macro (BHMG), which tend to invest in higher risk assets using complicated instruments, such as equity hedging, take stakes in less liquid privatelyowned businesses, and are happier using gearing, or borrowing money to invest. Ruffer sits somewhere in the middle, says MacInnes, and a point made clear by its controversial investment in bitcoin at around $48,000 in November 2020. Yes, it sold out within six months at about $65,000, netting a very handsome profit. But for many capital preservation investors, that’s not the sort of risk they want their
