Wealth Preservation vs Multi Asset Funds

coastline

Aminatidi wrote: »

Why would you compare it to an index?

To be fair the fund website have done just that and used the 20 year span to show performance. At the end of the day good luck to them as its a fund worth looking at.

http://www.capitalgearingtrust.com/~/media/Files/C/CGT/Monthly%20factsheets/October%202019/CGT.pdf

Aminatidi

coastline wrote: »

To be fair the fund website have done just that and used the 20 year span to show performance. At the end of the day good luck to them as its a fund worth looking at.

http://www.capitalgearingtrust.com/~/media/Files/C/CGT/Monthly%20factsheets/October%202019/CGT.pdf

I guess that's fair, but my point was more do people really buy CGT expecting it to perform the same as 100% equities?

talexuser

Aminatidi wrote: »

do people really buy CGT expecting it to perform the same as 100% equities?

Not if they have any sense, it's a capital preservation fund you buy as well as your racy Fundsmiths and Linsell Trains, which has a proven successful flexible remit and beats pure bond funds for a lowish extra risk.

Aminatidi

talexuser wrote: »

Not if they have any sense, it's a capital preservation fund you buy as well as your racy Fundsmiths and Linsell Trains, which has a proven successful flexible remit and beats pure bond funds for a lowish extra risk.

Quite.

I have 30% in CGT alongside 20% in those two

bowlhead99

Aminatidi wrote: »

I guess that's fair, but my point was more do people really buy CGT expecting it to perform the same as 100% equities?

They shouldn't, of course. Funds like CGT and PNL don't aspire to track a benchmark, but they show some sort of index as context because investors might find it helpful.

RCP (not really a capital preservation fund but somewhat cautiously positioned compared to some points in its history) has generally used a blend indexes as its benchmark/comparator because it doesn't solely invest in one class of assets or region.

PNL as another example, on its factsheet only shows the FTSE capital value against its own capital value, because they are not trying to deliver income. I'm not a fan of that approach because total return is the ultimate measure of performance and FTSE UK has had a relatively high level of income in recent decades which would go a way towards offsetting its capital value's underperformance against PNL, especially if reinvested and compounded.

Every few years some investor of PNL's will write to them to suggest that ignoring the income is inappropriate and they will respond with some comments in one of the quarterly reports. IIRC, their stance is that they are not investing with an income remit - merely to preserve and grow capital - and they don't wish to infer that their investors should reinvest their income, and the FTSE return is not a target anyway, so who cares how they present its return. I may be misrepresenting their argument but I remember not really agreeing with their thought process. Still, I'm comfortable with the ethos behind the trust and am tolerant of the quirks of the board - after all, I'm a grown-up and can easily get the data elsewhere. It's one of my largest holdings.

MichelleN

What are the main differences between CGT and the OEIC version Capital Gearing Absolute Return Fund? I believe, there is also Capital Gearing Portfolio fund?

Aminatidi

bowlhead99 wrote: »

They shouldn't, of course. Funds like CGT and PNL don't aspire to track a benchmark, but they show some sort of index as context because investors might find it helpful.

RCP (not really a capital preservation fund but somewhat cautiously positioned compared to some points in its history) has generally used a blend indexes as its benchmark/comparator because it doesn't solely invest in one class of assets or region.

PNL as another example, on its factsheet only shows the FTSE capital value against its own capital value, because they are not trying to deliver income. I'm not a fan of that approach because total return is the ultimate measure of performance and FTSE UK has had a relatively high level of income in recent decades which would go a way towards offsetting its capital value's underperformance against PNL, especially if reinvested and compounded.

Every few years some investor of PNL's will write to them to suggest that ignoring the income is inappropriate and they will respond with some comments in one of the quarterly reports. IIRC, their stance is that they are not investing with an income remit - merely to preserve and grow capital - and they don't wish to infer that their investors should reinvest their income, and the FTSE return is not a target anyway, so who cares how they present its return. I may be misrepresenting their argument but I remember not really agreeing with their thought process. Still, I'm comfortable with the ethos behind the trust and am tolerant of the quirks of the board - after all, I'm a grown-up and can easily get the data elsewhere. It's one of my largest holdings.

I have around 12.5% in Personal Assets and I agree it feels a bit "odd" to show a benchmark/comparison without reinvesting income.

As you say it comes down to the ethos/intention behind the fund.

The quarterlies are a bit of an acquired taste but I enjoy them

Aminatidi

MichelleN wrote: »

What are the main differences between CGT and the OEIC version Capital Gearing Absolute Return Fund? I believe, there is also Capital Gearing Portfolio fund?

Have a read of this as it highlights some of the differences.

https://quoteddata.com/research/cg-asset-management-rewards-longterm-thinking-2/

TCA

I'm looking to switch a good chunk of my investments into wealth preservation mode, so this is an interesting thread. My initial thinking was to buy CGT, PNL and RICA in equal proportions.

It's tempting to add RCP into the mix but for some reason it doesn't sit right with me. Apart from the 11% premium, the mix of funds, hedge funds, private equity, derivatives, venture capital, private investments and absolute return funds equates to me not understanding exactly what I'm getting. Certainly would be a capital preservation 'diversifier', in comparison to the others above, so for that reason I'll keep investigating.

Does anybody have a view on the currency exposure aspect of these trusts? Generally but also specifically about Brexit, in relation to PNL and RICA both having over 75% GBP exposure.

talexuser

bowlhead99 wrote: »

and they don't wish to infer that their investors should reinvest their income

Actually quite hard to do given the price of the units