Buy Capital Gearing Trust?

Michael121

aroominyork said:

Presumably sell gold when real interest rates start heading towards positive territory. His view came from this interview.

So, are real interest rates and the price of gold negatively correlated? This graph (from this website) suggests there is evidence for it.

Jurrien Timmer (@TimmerFidelity) / Twitter

aroominyork

Michael121 said:

Jurrien Timmer (@TimmerFidelity) / Twitter

"With inflation fears in retreat..." News to me!

ChilliBob said:

I did read elsewhere that people feel this Trojan/PNL approach is fairly easy to self replicate, and save on costs in the process. Not something which can be said for CGT.

I'm just passing this on rather than validating it as I'd not be inclined to try and copy either to be honest, I'd either hold them or not.

Make what you like of this since I do not know Trojan's past asset allocations, but at the moment it is about 35% equities (Fundsmith as proxy, given Trojan's holdings), 37% TIPS, mostly short dated (unhedged TIP5 as proxy), 12% gold-related investments (SGLP as proxy), 14% UK short-dated gilts as dry powder, 2% cash.

Type_45

aroominyork said:

Presumably sell gold when real interest rates start heading towards positive territory. His view came from this interview.

So, are real interest rates and the price of gold negatively correlated? This graph (from this website) suggests there is evidence for it.

Sell gold...  The world is $300 trillion in debt.  Weimar is coming.

anonmoose

I am looking to open another sipp in order to start building some wealth preservation funds slowly, is there a SIPP provider anyone would recommend from a cost/no exit fee point of view? 

I was thinking fidelity and starting with just £200ish a month and I don't think they have an exit fee but can anyone confirm?   Or is AJBell better for my purposes? The reason I want to open this extra sipp is I am currently with vanguard and want to start buying CGT or similar and global tracker instead of LS funds.

masonic

aroominyork said:

masonic said:

The gold exposure could be obtained more cheaply with an ETC and you have a hint as to when Lyon thinks it should be sold, so that shouldn't be a reason in itself to add PNL.

True, but equally I could buy some short/medium dated TIPS, some gold and Fundsmith and more or less replicate PNL. But then I turn into a trader, trying to stay just one step behind PNL.

Incidentally, while CGT has a track record of slightly outperforming CGAR, there is nothing to separate PNL and Troy Trojan - given their holdings that is understandable - so I am more drawn to the OEIC.

Quite, I'm of the belief that holding these trusts is superior than building a lookalike asset allocation. It is the evolution of the portfolio over time that we pay our money for. But I was just highlighting that the gold exposure in isolation shouldn't be sufficient grounds for holding both.

aroominyork

masonic said:

aroominyork said:

masonic said:

The gold exposure could be obtained more cheaply with an ETC and you have a hint as to when Lyon thinks it should be sold, so that shouldn't be a reason in itself to add PNL.

True, but equally I could buy some short/medium dated TIPS, some gold and Fundsmith and more or less replicate PNL. But then I turn into a trader, trying to stay just one step behind PNL.

Incidentally, while CGT has a track record of slightly outperforming CGAR, there is nothing to separate PNL and Troy Trojan - given their holdings that is understandable - so I am more drawn to the OEIC.

Quite, I'm of the belief that holding these trusts is superior than building a lookalike asset allocation. It is the evolution of the portfolio over time that we pay our money for. But I was just highlighting that the gold exposure in isolation shouldn't be sufficient grounds for holding both.

I'm inclined to agree about building a lookalike, though all I would need to do - given I own Fundsmith (Sustainable) and a global short duration bond fund - is top up the latter and add a bit of gold. However, as you say, I may not be aware when it has aged - a Dorian Gray portfolio!

Am I right in thinking that both PNL and CGT use unhedged TIPS? The price of the hedged version over the last year has been flat, so the gain for PNL/GRL has solely been down to the changing £/$ rate.

masonic

aroominyork said:

Am I right in thinking that both PNL and CGT use unhedged TIPS? The price of the hedged version over the last year has been flat, so the gain for PNL/GRL has solely been down to the changing £/$ rate.

Yes, perhaps I've not been enough of a broken record on this point It's helpful that they are not hedged, so the relatively higher outlook for UK inflation is not being countered by a derivative. The protection from GBP being regarded like an emerging market currency is a bonus.

aroominyork

Sorry - I must have been playing the B side. Walk me through this in baby steps if you have the patience, please. Is the derivative the cost of the hedging, and is there any link to future UK inflation other than not wanting TIPS proceeds not to be eaten up by forex/derivative costs? Also, since overseas bonds are usually hedged (eg at least 80% of them to qualify as a strategic bond fund) are you saying you are happy to have a play on a continually weakening Sterling?

I'm still a bit hazy about exactly why CGT/PNL do not hedge. Maybe you can direct me to your previously posted playlist?

masonic

aroominyork said:

Sorry - I must have been playing the B side. Walk me through this in baby steps if you have the patience, please. Is the derivative the cost of the hedging, and is there any link to future UK inflation other than not wanting TIPS proceeds not to be eaten up by forex/derivative costs? Also, since overseas bonds are usually hedged (eg at least 80% of them to qualify as a strategic bond fund) are you saying you are happy to have a play on a continually weakening Sterling?

I'm still a bit hazy about exactly why CGT/PNL do not hedge. Maybe you can direct me to your previously posted playlist?

My last performance was here, with an exchange between us going just over onto the following page. There have been several others, which, if not for the want of a decent search facility, I'd have been happy to provide. In short, if you start from the principle that a weakening currency leads to goods and services tending to become more expensive in local currency, then the corollary is that a weakening currency is somewhat inflationary. You then turn to foreign assets, such as equities, bonds, etc, and you find those go up in price as your currency weakens and your local inflation is relatively higher. In the special case of foreign index linked assets, you get the benefit of foreign inflation protection in foreign currency. Substitute in your inflationary weakening exchange rate, and you tend to get an extra element to the linking that brings you closer to local inflation protection, albeit with somewhat more volatility. Hedge your foreign index linked assets to home currency, and you smooth the ride, but remove the ability of those foreign assets to protect from excess local inflation. That's in addition to the drag on performance that the cost of hedging will impart.

Why CGT/PNL do not hedge their index linked assets (or nominal ones) is not a question for me, and I don't know if they have hedged in the past or would do so in the future. I would guess that they don't hedge because they don't see it as beneficial to medium or long term returns.

Albermarle

anonmoose said:

I am looking to open another sipp in order to start building some wealth preservation funds slowly, is there a SIPP provider anyone would recommend from a cost/no exit fee point of view? 

I was thinking fidelity and starting with just £200ish a month and I don't think they have an exit fee but can anyone confirm?   Or is AJBell better for my purposes? The reason I want to open this extra sipp is I am currently with vanguard and want to start buying CGT or similar and global tracker instead of LS funds.

You can buy WP investment trusts or WP OEICS.
You can get lower platform charges with the IT's , but buying £200 of them each month would rack up dealing charges. 
So for a regular investment of £200 a month you would be better to invest in the OEIC WP funds. In this case Fidelity do not have the cheapest platform charge, but there would be no buying or selling/exit costs, so should be fine