ZingPowZing v bowlhead challenge

Andrew31

IF i know ZPZ, he is still out their watching.  ESP HL threads LOL 

Username999

 
Which nominated charity is getting the £100?
 

eskbanker

Username999 said:

Is the competition over? 

Username999 said:

Which nominated charity is getting the £100?

Don't be so impatient, first post (at the start of the 12 month challenge in August 2019) is clear:

ZingPowZing said:
We'll see who fares better and on 16/08/2020, the loser pays £100 to the nominated charity of the winner.

cloud_dog

Bowlhead, would be interested in your thoughts on RCP and it's volatility (which has surprised me if I'm being honest). 

I know you enjoy devouring annual reports like Christmas cracker jokes so thought you may have some thoughts?  I'm unsure if it is purely demand / transaction related or whether it is related to the private equity element(s); although no formal revision of the NAV has been released for 3 weeks (last NAV RNS).

bowlhead99

cloud_dog said:

Bowlhead, would be interested in your thoughts on RCP and it's volatility (which has surprised me if I'm being honest). 

I know you enjoy devouring annual reports like Christmas cracker jokes so thought you may have some thoughts?  I'm unsure if it is purely demand / transaction related or whether it is related to the private equity element(s); although no formal revision of the NAV has been released for 3 weeks (last NAV RNS).

RCP's volatility hasn't been too surprising given its high equity content and it will have exposure to various higher yielding credit strategies which would suffer in the market conditions, as well as already being priced at a premium to NAV earlier this year. A blip downwards for a couple of weeks can't be unexpected even if people rapidly move back to it because it seems like it might be more conservatively positioned than other generalist investment funds.  I made some brief comments about 3 weeks ago at https://forums.moneysavingexpert.com/discussion/comment/76952107#Comment_76952107.

I was an avid buyer at £13, which was a window that didn't last very long (https://forums.moneysavingexpert.com/discussion/comment/76951959#Comment_76951959).

That said, despite the US market rallying substantially the last couple of days I think people piling in to RCP today at £18.90 today are overpaying. The published NAV for end of February was only £19.30 after a few percent fall from the January NAV, and we have all seen how global sentiment has turned since then. I don't think RCP has enough upside from treasuries to cover the downside on both the public and private equities. The private equities being measured at end of Feb will have inevitably been using some simple roll-forward of December fair value - if not September's, where audited December reports were not yet available from the underlying asset managers. For March valuations, private equity will get hammered either because of reducing public market comparables (P/E ratios) or declining prospective earnings estimates or both. Would you pay the exact same for a basket of investment assets today as you did at December when we hadn't heard there was going to be a global economic shutdown? No you wouldn't, if you have any sense. 

The lag in reporting the private equity part of the portfolio will cushion the NAV fall for March, but unless they aggressively re-positioned away from equities in late Feb or between sectors (and in fairness, they may well have made some adjustments in the face of market uncertainty) you would expect March's NAV to be quite a bit lower than Feb's.

RCP will have seen some 'flight to safety' from people hearing it is a conservatively-positioned fund. The fund is large but doesn't have perfect liquidity so people diving in as a 'cautious' way to play the rebound  in US and UK markets will push the price up faster than the underlying assets will rise.  Thanks for alerting me to look today and see just how far it rebounded. I have sold 400 shares this afternoon for £18.88 each (about £7.5k) across my ISA and SIPP.  I also sold around 300 late last week at about £16.90.

This isn't my entire position as I have been holding these shares for a long time and adding periodically for a long time (including the recent purchases at £13). The available market price to sell seems pretty high in relation to whatever the underlying NAV would be at the moment. Ultimately I may stand corrected if there is never a chance to get back in under £18, but I don't think that will be the case. Don't get me wrong, it is a decent investment vehicle and I haven't ordered my parents to sell theirs from their ISA portfolios. But market sentiment will be rocky for a while even if our PM is now 'stable and in good spirits'.  RCP is now just outside my top 5 holdings across ISA and SIPP having been top 3 for a long while. PNL is the largest, though I have a lot of holdings so even that is not a massive absolute percentage.

cloud_dog

It was up just over 10% at one point today, fairly gob smacking.

It is strange in these times when we get 3%, 4%, daily fluctuations and it is thought of a BAU (which it obviously isn't).

g002ahe

Does RCP have any chance of a comeback vs world indices / ls100? how is it currently running against ZingPowZing share picks?

With RCP marketing focus on "Wealth Preservation", surely that image has now been damaged significantly?
In fact, will this damage to image affect longer term confidence in the fund & therefore share price?

bowlhead99

g002ahe said:

how is it currently running against ZingPowZing share picks?

The ZPZ stock picks include Apple and Microsoft which are up 50% and 33% in sterling terms since the start of the thread last August. Whether it's sustainable for Apple to still be at their February share price given the global economic outlook, remains to be seen - some of their service lines will be fine in a downturn and others not so much. But with those picks making up half the portfolio it's unlikely that RCP (down about 12% on share price in the same timeframe) is going to catch up by the 1 year anniversary.

Another quarter of the fantasy portfolio was in BHP which is down 24% from last summer, so the picks weren't all equally fortunate ones.

Does RCP have any chance of a comeback vs world indices / ls100? 

With RCP marketing focus on "Wealth Preservation", surely that image has now been damaged significantly?
In fact, will this damage to image affect longer term confidence in the fund & therefore share price

RCP is not heavily marketed as wealth preservation (it's not it's whole 'reason to be') and has generally been positioned considerably less conservatively than capital protection products or vehicles such as PNL, CGT, the Troy funds, and so on, with a higher equity content. Any prospective investors looking under the hood would have found that from the reports.

Per the last factsheet (end of March) its NAV total return YTD was -10.3%, while the comparator MSCI All Country World Index (50% Sterling) was down -17.9%.  While a 100% global equity benchmark is useful for putting the returns into context, there are not many people who would consider it as an alternative to a product such as Lifestrategy 100% equity or a global equity index tracker. 

They aim to 'deliver long term capital growth, while preserving shareholder value" and they "invest without the constraints of a formal benchmark". The fact that the growth should come 'while preserving shareholder value' implies that the growth in NAV will be less volatile than a pure equities fund, and based on the Q1 NAV total return (-10.3% for RCP vs -17.9% for MSCI ACWI 50% sterling, as mentioned) that does seem to be the case.

I don't think a downward fall in extreme market conditions is something to be worried about if the general goal is long term capital growth. So I don't think there is any irreparable damage to reputation.

AnotherJoe

I'll be updating my portfolios then as well. Doesn't seem much point on a mid term report given extreme variability. 

Thrugelmir

g002ahe said:

Does RCP have any chance of a comeback vs world indices / ls100? how is it currently running against ZingPowZing share picks?

With RCP marketing focus on "Wealth Preservation", surely that image has now been damaged significantly?
In fact, will this damage to image affect longer term confidence in the fund & therefore share price?

Why a comeback when the game is well and truly still in play?  Seems as if you are getting ahead of events. As many are.