RIT Capital Partners says its net asset value per share increased to 1,730 pence during 2016, representing a return of 12.1%. Its shares traded at a premium which averaged 4.6% during the course of the year and total shareholder returns amounted to 14.2%. The dividend was edged up to 31p from 30p. They intend to pay a dividend of 32 pence per share in 2017. This will be paid in two equal payments of 16 pence in April and October.
The fund’s quoted equity exposure was reduced, averaging 46% over the year, and they cut the allocation to Sterling, ending the year at 24%. They continue to hold gold and gold mining shares amounting to 6% of the portfolio.
Within the equity portfolio, some of their best performing managers of recent years produced negative results in the year under review. Against this, RIT Capital Partners increased its asset allocation to Absolute Return and Credit (from 14.2% to 23.6% of the portfolio) which delivered satisfactory results, including for example Eisler Capital, the macro manager where they were a founder investor. Overall the focus has been to invest in companies which stood to benefit from policymakers’ continuing efforts to reflate economies, such as US financials and the industrial sector.
Private investments, both direct and those managed by third parties, met our expectations, for example, benefiting from the sale of their defensively structured investment in Williams & Glyn, which generated a 1.8x return over three years. Two significant new investments were made during the course of the year into Acorn and CSL. Acorn is one of the world’s largest coffee businesses incorporating DE Master Blenders, Keurig Green Mountain and Mondelez’s former coffee business. CSL is the UK’s second largest alarm signalling company. Both were co-investments with industry partners with whom they have developed close relationships – Acorn alongside BDT Capital and CSL with ICONIQ Capital.
On currencies, they became cautious on the outlook for Sterling over the course of the year, increasing exposure to currencies outside the UK, in particular the US Dollar. This represents a continuation of RIT’s long-standing policy of an unconstrained approach to currency positioning.
RCP : RIT Capital ups exposure to absolute return and credit