RIT & Capital Gearing as Defensives?

kidmugsy

rathernot wrote: »

Quite and part of this exercise is to de-risk a little so hopefully in such a scenario I'm not that mug.

And very reasonable too. I'm not sure any of us knows whether we'd panic in a crash until we've lived through one while invested heavily in equities.

rathernot

kidmugsy wrote: »

And very reasonable too. I'm not sure any of us knows whether we'd panic in a crash until we've lived through one while invested heavily in equities.

The recent blip was an eye opener.

I get it, it's being used to it and it's psychology but green looks better than red when you're in a platform portal and when you're usually used to seeing green you don't always react the way you think you will when it goes quite a bit to the red

intowhere

Are you looking at buying into Bonds? Are they worthwhile as a means to diversify?

rathernot

intowhere wrote: »

Are you looking at buying into Bonds? Are they worthwhile as a means to diversify?

I've put a slug into PNL and CGT in one ISA.

They seem quite large on TIPS rather than generic government/commercial bonds.

Time will tell.

BLB53

Personally I like Capital Gearing and have ~10% weighting in my portfolio. I have been happy with performance so far - a good 'steady Eddie' which helps to calm the nerves during the volatile periods such as we have seen over recent weeks. The manager is very experienced and has been at the helm for over 30 years.

You may be interested in the write up on the DIY Investor site

http://diyinvestoruk.blogspot.com/2018/06/capital-gearing-full-yr-results.html

rathernot

BLB53 wrote: »

Personally I like Capital Gearing and have ~10% weighting in my portfolio. I have been happy with performance so far - a good 'steady Eddie' which helps to calm the nerves during the volatile periods such as we have seen over recent weeks. The manager is very experienced and has been at the helm for over 30 years.

You may be interested in the write up on the DIY Investor site

http://diyinvestoruk.blogspot.com/2018/06/capital-gearing-full-yr-results.html

Thank you.

I did a simple equal split between CGT, PNL, RCP, Fundsmith and Lindsell Train in the one ISA.

The other ISA has 60% split between Lindsell Train and Fundsmith and the other 40% in LS60.

I'll be maxing out next years allowance I just need to work out whether to go the passive route or the active route or a little of both, but either way my intention is to get approx 65% equities and the rest ideally a bit more diversified than "some bonds".

seacaitch

Per my previous post, I was surprised to see you write that you'd plumped for RCP bearing in mind what it appeared you were seeking to achieve with your recent portfolio shifts...

To be clear: in no way is that comment remotely intended as a criticism of RCP, merely that it doesn't obviously fit the profile of something designed to significantly alter (reduce) the risk profile of your portfolio, bearing in mind RCP's apparent ~85% risk assets exposure. It does bring some additional diversification, which could be good, but no clear material reduction in exposure to volatile asset prices, which I'd thought was your core objective.

And, this is compounded by RCP currently sitting at a hefty >8% premium-to-NAV, which in a brutal market selloff could easily reverse into a similar or larger-sized discount-to-NAV, magnifying your drawdown. RCP has afterall traded at >=10% discounts-to-nav as recently as 2013, 2010 & 2009, so in the absence of a discount control policy, why wouldn't it do so again, and do so in a bear market when you'd be most psychologically at risk of capitulating and selling low?

This is the quandary you have: a very long term investment horizon, perhaps as much as 30-50 years, which theoretically provides you ample scope for a very high (maximum) weight to risk assets in order to reap the greatest rewards; balanced against the early taster you'd had for how sharp drawdowns in a portfolio value can feel very uncomfortable, making you doubt your own ability or willingness to sit-tight and hold on through a deep bear market.

Calibrating these things can be tricky!

If you really do intend to get your overall portfolio down to ~65% equities, then even after these recent changes you've made, you're nowhere remotely near that, and in particular the swapping of a one-tenth slice of your portfolio from 100% equity (Fundsmith/LTGE) to a ~85 slice (RCP) won't have contributed in any material way, as it represents a <2% reduction in your overall risk asset exposure.


NB I'm not trying to suggest you take any particular course of action here except give things plenty of thought. It's much better to think these things through upfront rather than in the depths of a bear market when under great stress and liable to behave irrationally. And better to be slightly more conservatively positioned and forego gains rather than be too aggressively positioned and be shaken out when markets tank - as they always do eventually - because panic selling when markets are low due to miscalibrating your risk appetite can result in irreparable harm to your portfolio and your ability to keep on investing in the future.

rathernot

Fair Overall it's around 8% of what's across both ISA's so in that regard I see it as an 8% allocation to stuff that just isn't widely/easily available so in that sense yes, very much seeing it as a diversifier rather than as defence - that's what PNL and CGT are there for in that particular ISA.

> Calibrating these things can be tricky!

Bang on

> better to be slightly more conservatively positioned and forego gains rather than be too aggressively positioned and be shaken out when markets tank

Also bang on and part of my thinking with the current re-adjustments.

Between now and April next year I'll be giving a lot of thought to whether next years £20K goes passive or active or both.

By that point I should be on around £80K in total.

Psychologically I'm also trying to juggle thinking of the two ISA's as two "strategies" whilst keeping in mind that the sum of both is also an overall strategy, if that makes sense?

AlanP_2

rathernot wrote: »

Psychologically I'm also trying to juggle thinking of the two ISA's as two "strategies" whilst keeping in mind that the sum of both is also an overall strategy, if that makes sense?

Sorry if I missed this earlier, but why is it two strategies and does it need to be?

Are they building pots for use at different times or do they have different desired results?

rathernot

AlanP wrote: »

Sorry if I missed this earlier, but why is it two strategies and does it need to be?

Are they building pots for use at different times or do they have different desired results?

Certainly doesn't need to be.

It's more that I want to see how a couple of approaches pan out and I happen to, for now, have separate ISAs which makes this reasonably easy to visualise.

Ended up approximately here with this particular ISA.

• Fundsmith 19%
• Lindsell Train Global Equity 19%
• Capital Gearing Trust 19%
• Personal Assets 19%
• Ruffer 5%
• RIT Capital Partners 19%

Which puts me around 60/40 between equities and other.