By Emma Wallis, News editor, Trustnet, 8 April 2025:
During periods of market turbulence when investors want to run for the hills, capital preservation strategies come to the fore. Two of the best-known investment trusts that invest cautiously and prioritise downside protection are Personal Assets and Capital Gearing..
The two trusts have similar goals but describe and approach them differently, said Ben Yearsley, director of Fairview Investing..
James Carthew, head of investment company research at QuotedData, pointed out that Capital Gearing has more in cash and short-dated securities than Personal Assets (32% versus 24%). Within this area, Capital Gearing has some exposure to corporate credit that Personal Assets does not..
When it comes to not losing money, the trusts were both in negative territory for two of the past 10 calendar years, although several analysts argued that they should be judged over a full market cycle.
They lost money in 2022 but did not fall as far as global equity markets – Personal Assets lost 3.8% and Capital Gearing fell 4.2%, whereas the MSCI World fell 7.8% in sterling terms.
Carthew said: “Both lost money in NAV terms when rates rose sharply in response to inflation that both of them had been warning against. The hit to Capital Gearing was magnified by discount widening on its investment companies exposure.”..
Yearsley expressed a preference for Personal Assets, which he has held for many years, but he also thinks Capital Gearing has a strong process..
Carthew, however, opted for Capital Gearing. “It trades on a slightly wider (about 1%) discount and, more importantly, has the potential to benefit from narrowing discounts”, he said, due to its investment company holdings.
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