• The portfolio was updated in October 2013. See the update here.
It has been a little over six months since I told you that I would review our investment-trust portfolio every six months. Sorry about that. The good news, however, is that, while I have been ignoring it, it has done just fine.
On average, the six trusts have returned about 7.8% since we suggested them in June. You won’t have done quite that well, of course (thanks to transaction fees and stamp duty), but I don’t suppose you will be complaining too much – particularly as that doesn’t include dividends.
The top performers (see below) were Scottish Mortgage and Finsbury Growth – both up over 20% – and the worst RIT Capital and 3I Infrastructure.
So what next? Not much. Personal Assets has a clear remit: to “protect and grow” your capital – in that order. It has done that and we have no complaint at all about its management. It holds all the things we like – including a load of gold (13% of the portfolio) and the good-quality equities we tip endlessly. It stays.
RIT is more complicated. Since we first wrote about this in June, the old chief investment officer, Micky Breuer-Weil, who had been in the position for 18 years, has stepped down. The new one, Ron Tabbouche, is untested in this kind of position. That makes me nervous (his experience is in long-only equities rather than the private equity and so on that RIT is known for).
It makes our advisory panel nervous too. The fund has, says Alan Brierley of Canaccord Genuity, become a “bit of an enigma” and there are “a lot of questions about the underlying fundamentals”. That said, neither he nor Winterflood’s Simon Elliot would sell it: it has preserved capital in the last few months, “which is its primary focus”, and it is, as we all know, rarely a good idea to sell funds after a period of underperformance. But Sandy Cross of Rossie House would like to sell it.
Other proposed changes? Alan thinks it might be an idea to sell a bit of Finsbury – a 20% gain in a “world of low numbers shouldn’t be sniffed at”. He doesn’t much like 3i either – having a management “who seem to be scared of making new investments” adds too much risk. Hmmm.
So if we did take anything out, what would we put in? Alan would dump 3i for HICL Infrastructure. Sandy suggests the Henderson Smaller Companies Investment Trust on the basis that growth will be hard to come by this year, but it has a manager who “has a good record of choosing companies which can generate decent growth”.
And everyone is keen on a bit more private equity, which is, says Alan, “the cheapest sector and the greatest opportunity”. Which funds? Pantheon, NB Private Equity, HarbourVest or Standard Life European Private Equity, says Alan. Electra Private Equity or Standard Life, says Simon.
You will be pleased to hear that I have listened carefully to all this advice and decided to do nothing. I am mildly concerned about 3i (Alan makes good points on this), so will be keeping an eye on it. We might chuck it next time we review. However, the one I am really concerned about is RIT, simply because the management structure isn’t what it once was.
I’m keeping it for now because the markets have had a good run (hence the 20% returns from our two best performers!) and if that turns we will be protected to a degree by our holding in RIT. But it might not make the cut when we come back to this in June.
You might remember from the creation of the original portfolio that one of my worst fears is to be thought dull. And this lack of change is, of course, very dull indeed. However, this is supposed to be a core long-term portfolio, so please supplement it as you see fit – if you have no exposure to Japan you might consider the Baillie Gifford Japan Trust (LSE: BGFD). I’m thinking of adding the Henderson fund (LSE: HSL) suggested by Sandy and the Standard Life (LSE: SEP) fund so loved by Simon and Alan to my own self-invested personal pension (Sipp).
Our favourite investment trusts
| Investment Trust | Ticker | Price (p) 16/1/13 | Price (p) 15/6/12 | % change |
|---|---|---|---|---|
| BH Macro | LSE: BHMG | 2,011 | 1,945 | 3.4% |
| Personal Assets | LSE: PNL | 34,260 | 34,090 | 0.5% |
| Scottish Mortgage | LSE: SMT | 783 | 642.5 | 21.9% |
| Finsbury Growth | LSE: FGT | 401 | 330 | 21.5% |
| RIT Capital | LSE: RCP | 1,132 | 1,135 | -0.3% |
| 3i Infrastructure | LSE: 3IN | 122.6 | 123 | -0.3% |
| Investment Trust | Latest NAV (p) | NAV (p) 15/6/12 | % change | Prem/disc 16/1/13 | Prem/disc 15/6/12 | Yield 16/1/13 |
|---|---|---|---|---|---|---|
| BH Macro | 2,080 | 1,942 | 7.1% | -3.4% | 0.2% | n/a |
| Personal Assets | 34,200 | 33,675 | 1.6% | 0.2% | 1.2% | 1.6% |
| Scottish Mortgage | 855.4 | 693.4 | 23.4% | -8.4% | -7.3% | 1.7% |
| Finsbury Growth | 398.8 | 328.2 | 21.5% | 0.9% | 0.5% | 2.4% |
| RIT Capital | 1,180 | 1,211 | -2.6% | -3.9% | -6.3% | 2.5% |
| 3i Infrastructure | 121 | 119 | 1.7% | 1.2% | 3.4% | 4.8% |