Capital Gearing Trust

crisis_management

Quick question - I bought a fair amount of cgt between May and August last year - every single purchase is in the red, with an overall return of minus 7% or so. Other investments, such as VWRP, are positive. Does this mean that the wealth preservation aspect isn't working, or is it more likely that I'm just being impatient?

masonic

It's an investment trust, and its shares traded at a premium at the time you bought. They are now trading at a discount. NAV performance has been relatively flat over that short period of time, but it is not surprising that it hasn't benefited from the recovery in equities. It's wealth preservation aspect hasn't been working over the short term, or you'd have seen a 10%+ increase in value to keep up with inflation. It's best to judge a fund like this over 5 or 10 years, and compare with traditional defensive assets rather than equities.

NoviceInvestor1

The 10 year return on this is worse than you can get risk free, which begs the question whether it's worth the risk or not....

eskbanker

NoviceInvestor1 said:

The 10 year return on this is worse than you can get risk free, which begs the question whether it's worth the risk or not....

It also begs the question of whether you're making a meaningful like for like comparison - are you looking at the past ten years of CGT versus the future return from a ten year fixed savings account?

coastline

NoviceInvestor1 said:

The 10 year return on this is worse than you can get risk free, which begs the question whether it's worth the risk or not....

To be fair in 10 years CGT has done it's job preserving cash as it's above CPI and RPI over 10 years. The longer term performance is more than respectable even comparing with the world equity index. 9% annually versus 10% annually for MSCI World Index. All on the chart if you change the tabs.

Chart Tool | Trustnet

aroominyork

NAV of CGT over ten years has risen from 3148 to 4915 excluding dividends. That is 56% or 4.6% pa. Where would you have got that risk-free between 2013 and 2023 please?

NoviceInvestor1

Morningstar is showing that during the last 10 years, one of the biggest bull markets in history, CGT returned just over 4% p/annum.

As of today you can lock in just over 4% p/annum risk free.

If during such a bull run CGT returned 4% is it likely to return more during the choppier waters we have moving forward? 3.54% last 3 years and -2.34% last year suggests perhaps not.

Given we are investing with an eye on the future, I think it's reasonable to explore whether the likely returns from CGT in future make the risk worthwhile compared to what you can get risk free.....

NoviceInvestor1

coastline said:

NoviceInvestor1 said:

The 10 year return on this is worse than you can get risk free, which begs the question whether it's worth the risk or not....

To be fair in 10 years CGT has done it's job preserving cash as it's above CPI and RPI over 10 years. The longer term performance is more than respectable even comparing with the world equity index. 9% annually versus 10% annually for MSCI World Index. All on the chart if you change the tabs.

Chart Tool | Trustnet

Longer term historic performance is irrelevant to an extent, as CGT had a complete change of mandate. It's not going to replicate the returns it offered in the past as it employs a very different investment strategy these days.

Albermarle

Given we are investing with an eye on the future, I think it's reasonable to explore whether the likely returns from CGT  any risk based investment in future make the risk worthwhile compared to what you can get risk free.....

Amendment in bold

NoviceInvestor1

Albermarle said:

Given we are investing with an eye on the future, I think it's reasonable to explore whether the likely returns from CGT  any risk based investment in future make the risk worthwhile compared to what you can get risk free.....

Amendment in bold

That's seems a valid/reasonable point! 

aroominyork

NoviceInvestor1 said:

coastline said:

NoviceInvestor1 said:

The 10 year return on this is worse than you can get risk free, which begs the question whether it's worth the risk or not....

To be fair in 10 years CGT has done it's job preserving cash as it's above CPI and RPI over 10 years. The longer term performance is more than respectable even comparing with the world equity index. 9% annually versus 10% annually for MSCI World Index. All on the chart if you change the tabs.

Chart Tool | Trustnet

Longer term historic performance is irrelevant to an extent, as CGT had a complete change of mandate. It's not going to replicate the returns it offered in the past as it employs a very different investment strategy these days.

Could you please describe the change of mandate and strategy?