RIT Capital Partners (RCP) announced its results for the half year ended 30 June 2023. NAV total return for the period was -0.2% while shares fell 4% over the same period and now trade at a discount of 21%. This compares to the MSCI ACWI which was up 11.0% and CPI plus 3% at 5.5%. The company noted that other equity indices did less well, with the FTSE 250 declining by nearly 1%.
In terms of contribution, quoted equities returned almost 7%, adding 2.6% to NAV. This reflected good performance from the Japan and healthcare themes, as well as strong stock selection, with Builders FirstSource a standout performer. Direct private investments returned 4.5%, with a number of transactions at or above their December valuations, providing support for the robustness of the company’s valuation approach. However, mainly as a result of the receipt of Q4 valuations for private funds, the book overall was down slightly.
Commenting on the results and the outlook, Chairman Sir James Leigh-Pemberton noted;
“Some recent data releases suggest that the rates of inflation in Western economies are showing the first signs of moderating. However, they remain materially above central banks’ target rates, and there is a strong body of evidence pointing to the fact that we have not yet seen the peak in policy rates, nor can the risk of recession be ruled out at this point. In view of the time lag on the full effect of monetary tightening, we may not yet have seen the full impact of tighter conditions on consumer demand, credit conditions, corporate margins, earnings and financing costs. We therefore do not believe that the grounds for our moderate levels of quoted equity exposure have changed.
“Nevertheless, this complicated backdrop is providing a fertile environment for our Manager, JRCM, to identify opportunities in both quoted equity and credit markets which should, we believe, offer healthy double-digit returns with a meaningful margin of safety. The ability to identify these opportunities and to conduct the in-depth analysis to assess them is a core capability of JRCM. The strength in depth which we have in these areas at our manager is a cause for optimism for the future, and I am delighted that Nick Khuu has been promoted to Co-CIO. Nick is a very experienced investor who has been instrumental in the management of both our quoted equities and uncorrelated strategies. He is an excellent addition to JRCM’s senior leadership team.”
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