Capital Gearing Trust

hallmark

Noticed CGT currently shows as having barely 15% in stocks currently, with more than 70% in bonds/cash.

aroominyork

hallmark said:

Noticed CGT currently shows as having barely 15% in stocks currently, with more than 70% in bonds/cash.

Yup. They use the category of funds/equities for their risk assets, comprising (Dec 23 factsheet) 15% equities, 6% infrastructure, 3% property, 3% loans & junk bonds. A stonking 50% is in index-linked gilts. I now have a better understanding of the role of CGT/WPs funds in a portfolio than when I bought it in 2022, and it is not right for me.

Hoenir

aroominyork said:

Hoenir said:

talexuser said:

How will this affect performance? stabilise the discount? I sold out early last year and topped up Personal Assets instead because of the poor calls lately.

Discount only widened when some retail investors panicked.  Even wealth preservation funds do lose money in a calender year, albeit rarely. 

Do you think discounts in ITs only widen when investors 'panic', or was this a special case?

Discounts are simply supply and demand related. Social media has a lot to answer for in terms of knee jerk reactions. Which temporarily widens the discount. The inherent danger when investors follow the herd and invest without actually understanding what they are investing in. Behavioural finance is a topic in itself. 

aroominyork

Methinks son of Thrugelmir is with us.

coastline

70% CASH/MMF and 30% in a global tracker would give CGT a run for its money. Recently it's been down 15% and during the pandemic a similar 15% ( check the chart ). Global tracker was down 25% during pandemic but under a 70/30 set up that 25% would be just 7.5% . In a mechanical set up you could rebalance from cash to global tracker every 10% fall in the market . So not that often but take advantage of any opportunities. CGT isn't the adventurous fund it was in the early days which is shown by todays equity allocation. Maybe if there was a huge crash it would switch more to equity but how much ? Have a look at the data below the chart that 70/30 system would have outperformed over last 15 years.

 Chart Tool | Trustnet

ColdIron

aroominyork said:

Methinks son of Thrugelmir is with us.

Oh yes  

Hoenir

coastline said:

70% CASH/MMF and 30% in a global tracker would give CGT a run for its money. Recently it's been down 15% and during the pandemic a similar 15% ( check the chart ). Global tracker was down 25% during pandemic but under a 70/30 set up that 25% would be just 7.5% . In a mechanical set up you could rebalance from cash to global tracker every 10% fall in the market . So not that often but take advantage of any opportunities. CGT isn't the adventurous fund it was in the early days which is shown by todays equity allocation. Maybe if there was a huge crash it would switch more to equity but how much ? Have a look at the data below the chart that 70/30 system would have outperformed over last 10 years.

 Chart Tool | Trustnet

CGT are transparent in their line of forward thinking and publish regular market commentary. Choice is ours to agree or disagree. As with any investment decision. 

 

talexuser

Hoenir said:

Discount only widened when some retail investors panicked.  Even wealth preservation funds do lose money in a calender year, albeit rarely. 

But Capital was losing a lot more than eg Personal Assets for a WP fund. Is the very recent jump better investments or just discount management?

aroominyork

talexuser said:

Hoenir said:

Discount only widened when some retail investors panicked.  Even wealth preservation funds do lose money in a calender year, albeit rarely. 

But Capital was losing a lot more than eg Personal Assets for a WP fund. Is the very recent jump better investments or just discount management?

What recent jump? Over five years CGT and PNL performed very similarly until the second half of 2022 when they diverged, mostly because CGT made a greater move from premium to discount. Over the last six months they have again performed similarly. One thing I find interesting is their similarity despite CGT's equities mostly being European value while PNL's are American growth.

eskbanker

ColdIron said:

aroominyork said:

Methinks son of Thrugelmir is with us.

Oh yes  

The style's a bit of a giveaway. As well as the content. Featuring multiple staccato micro-sentences. Often without verbs....