RIT Capital assets hit high as Rothschild bows out – over the first six months of 2019, RIT Capital Partners delivered a total return on NAV of 8.5%. Net assets surpassed £3bn and the company’s share price rose by 10.1%. A second interim dividend of 17p has been declared, bringing the total to 34p, 3% up on the previous year.
This is Lotrd Rothschild’s last report to shareholders as chairman of RIT Capital Partners. He hand over to Sir James Leigh-Pemberton at 30 September. The asset milestone helps underline the success of the company since he established it over 30 years ago. We wrote a note in advance of the trust’s 30th birthday that explains how it goes about making and preserving money for its investors – Healthy absolute return with less risk.
There isn’t much detail in the statement. On performance, the chairman had this to say “Single stocks performed well. We also achieved strong returns from our China-related investments, where we increased exposure at the time of last year’s volatility. We deployed additional capital to a number of new private investments, including a $50 million investment into ‘KeepTruckin’, a US-based logistics business, as well as other investments in early stage growth companies and funds in the US and Asian markets. These follow on from our investment last year of a similar amount into Coupang, the South Korean online consumer business which continues to grow strongly.
Our exposure to absolute return and credit assets continued to generate returns, while our gold-related investments appreciated during June. On currencies, we reduced our US Dollar exposure in the expectation of the Federal Reserve lowering interest rates.
We remain cautiously positioned with net quoted equity exposure of 43% and private investments of 26%. Valuations are, on many metrics, at the upper end of historical ranges at a time when geopolitical risks abound; credit quality is deteriorating; and global economic growth is weakening.
Of particular concern is whether the current high level of corporate profitability is sustainable. The last decade has seen a confluence of factors which have benefitted companies’ earnings to an unprecedented extent. Lower cost of capital, reduced taxes, stagnant wages and the influence of globalisation contributed to record profit margins. These positive factors are, however, unlikely to be sustained. Trade wars, the weakening of economic growth and the risk of recession are of concern, particularly at a time when stock markets have reached all-time highs.”
RCP : RIT Capital assets hit high as Rothschild bows out
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