RIT & Capital Gearing as Defensives?

rathernot

If I was looking to allocate 40% or 50% to a basic portfolio and wanted a defensive choice but with long term growth potential what do people think of Capital Gearing and RIT please?

http://www.moneyobserver.com/our-analysis/nine-safe-haven-investment-trusts-to-weather-market-slide

and plenty of other articles highlight them as good defensive options but the historical returns also look solid as a long term option v trying to get rich quick.

A_T

Over long term are these really any better than the much cheaper Lifestrategy or HSBC Global Strategy?

Linton

RIT is rather more volatile than other Wealth Preservation funds. Other than RIT I hold Ruffer and Trojan O. We will have to wait for a decent crash to see if they provide a resonable alternative to the currently over priced safe bonds.

Holding 3 WP funds I didnt see any point in buying Capital Gearing as well.

rathernot

Yes that's why I'm slightly unsure why it seems classed as a defensive.

Trojan O was another option I was looking into, and my platform doesn't have Ruffer else I'd consider that, but it seems impossible to balance low platform costs with being able to get access to everything you'd like.

Mind if I ask your allocation and reasoning?

Linton

A_T wrote: »

Over long term are these really any better than the much cheaper Lifestrategy or HSBC Global Strategy?

They arent a replacement for either VLS (except possibly VLS20) or HSBC Global Strategy, but rather for safer government bonds which are currently at a price which is likely to fall significantly as interest rates rise. VLS has no choice but to invest in such bonds and will suffer in due course. The HSBC fund has chosen to invest significantly in corporate bonds instead. Though in the next crash these could prove to be inadequate. We will have to wait and see who has got it right.

Thrugelmir

rathernot wrote: »

Mind if I ask your allocation and reasoning?

Diversification. Contarian holdings smooth out the bumps.

rathernot

Thrugelmir wrote: »

Diversification. Contarian holdings smooth out the bumps.

Yes, I meant allocation between the three Linton mentioned

Linton

rathernot wrote: »

Yes that's why I'm slightly unsure why it seems classed as a defensive.

Trojan O was another option I was looking into, and my platform doesn't have Ruffer else I'd consider that, but it seems impossible to balance low platform costs with being able to get access to everything you'd like.

Mind if I ask your allocation and reasoning?

Ruffer is an IT like RIT and RCP and so should be available on most platforms. If you have a small portfolio any of the % charging platforms should be cheap and with a large portfolio II is cheap.

The allocation is to split each WP fund and a Strategic Bond fund fairly evenly because there was no good reason to do anything different until I had a better understanding of their characteristics. Together they comprise about 25% of my total investments. That figure was chosen on the basis if everything else failed it should be sufficient to last me the rest of my days at a moderate standard of living and so I could invest the remaining 75% at a relatively high risk without having sleepless nights.

kidmugsy

There's also Personal Assets Trust.

rathernot

Linton wrote: »

Ruffer is an IT like RIT and RCP and so should be available on most platforms. If you have a small portfolio any of the % charging platforms should be cheap and with a large portfolio II is cheap.

The allocation is to split each WP fund and a Strategic Bond fund fairly evenly because there was no good reason to do anything different until I had a better understanding of their characteristics. Together they comprise about 25% of my total investments. That figure was chosen on the basis if everything else failed it should be sufficient to last me the rest of my days at a moderate standard of living and so I could invest the remaining 75% at a relatively high risk without having sleepless nights.

Yes I had similar thoughts on an even split. The allocation inside the portfolio is where I'm still pondering.

Currently it's 100% equities as it's only just started and my timeline is a long way out and there's a lot of cash so I'm not at all dependent on it performing well for any income.

It's what to allocate so I'm not 100% equities but don't have 50% sitting returning nothing which is where the fact RIT and CGT appear to have good returns.

Audaxer

Linton wrote: »

VLS has no choice but to invest in such bonds and will suffer in due course.

Hopefully if the VLS government bonds do suffer a downturn, they will still recover and be a good diversifier in the long term. Although it is currently a fixed allocation, presumably VLS management could allocate more to corporate bonds and less to government bonds if they were under the impression that government bonds were no longer a viable option?