We compare Capital Gearing, Personal Assets, RIT and Ruffer
Thursday 07 Jul 2022 Author: Steven Frazer

There are dozens of different investment strategies, but most investors are largely looking to either build wealth for the long run or look after what they already possess. This latter objective is what capital preservation funds are designed to do.

There are a handful of specialist investment trusts which fall under the capital preservation banner, including Capital Gearing Trust (CGT), Personal Assets Trust (PNL), RIT Capital Partners (RCP) and Ruffer Investment Company (RICA).

Protecting your wealth is important when approaching or enjoying retirement, since your investments should hopefully provide the cash needed to pay the bills, keep the fridge stocked, cover healthcare costs, and ideally, allow you to go to a restaurant for a nice meal or to the theatre occasionally.


Hellish global stock markets this year have seen an increasing number of investors drawn to investment opportunities with a blueprint to not lose money.

‘The relevance of capital preservation trusts has never been greater,’ says Duncan MacInnes, co-manager of Ruffer. ‘We’ve been talking about the return of inflation and cross-asset correlations for two years and people thought we were a bit crazy.’

The topic now gets far less push back because you can see inflation for yourself in daily life, the manager says.

Long-term performance figures show that Capital Gearing, Personal Assets, RIT and Ruffer have made investors money as well as stopping them from losing it. ‘We have an investment objective to protect and increase the value of shareholders’ funds over the long-term, in that order,’ says Troy Asset Management, which runs Personal Assets Trust.


There are subtle differences between each trust. One of the most important is investment complexity, believes Ruffer’s MacInnes. Capital Gearing and Personal Assets inhabit the simple end of the ‘spectrum of complexity’, says the manager, in that their strategies are not difficult for most investors to understand.

At the more complex end, there’s RIT and BH Macro (BHMG), which tend to invest in higher risk assets using complicated instruments, such as equity hedging, take stakes in less liquid privately-owned businesses, and are happier using gearing, or borrowing money to invest.

Ruffer sits somewhere in the middle, says MacInnes, and a point made clear by its controversial investment in bitcoin at around $48,000 in November 2020. Yes, it sold out within six months at about $65,000, netting a very handsome profit. But for many capital preservation investors, that’s not the sort of risk they want their funds to take.

Transparency also sets apart capital preservation trusts. Investors easily can find the largest holdings of Capital Gearing, Personal Assets and Ruffer on their respective websites, plus complete portfolio breakdowns on a semi-regular basis.

In contrast, RIT provides limited detail on its portfolio composition, although the Association of Investment Companies’ website has more thorough information on specific stocks owned.

For example, at the end of May, Capital Gearing’s largest stake was its holding in the iShares MSCI JP ESG Screened Japan ETF (SAJP). For Personal Assets, gold is its biggest stake at 9.1% of the fund.

Ruffer’s largest equity holding is 3.2% of assets in BP (BP.). At around 30% of funds invested, Ruffer has a larger proportion of its portfolio in equities.

The difference in complexity is reflected in share price performance. RIT trades on a 9% discount to net asset, according to the AIC, whereas its capital preservation peer group remain within two or three percentage points of net assets.


Dividends is another area where the pool of trusts differ. For example, Ruffer aims to distribute more than 85% of the net income received from investments each year, but it will not use capital to prop up dividends, which can mean fluctuating payouts.

Personal Assets pays quarterly dividends whereas Capital Gearing only pays them once a year.

While at first glance capital preservation trusts may look like an off-the-shelf investment option, investors should read through all the details before investing.

Some have a better record for retaining value for investors, others for consistency of income, while they all will carry varying degrees of exposure to equities and bonds, and in some cases, other more complicated assets.

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