With the number of COVID-19 coronavirus cases continuing to ratchet up, investors are increasingly looking for tools to help them protect their portfolios from wild market swings. 
And while some strategies have struggled to deal with the fall-out, others have held up better.
“A number of global investment companies place as much emphasis on preserving investors’ capital as increasing its value,” the analysts at Numis Investment Companies noted.
“These portfolios bear little comparison to global equity market indices and often invest across a range of asset classes, including fixed income, index-linked securities and gold.”
Such trusts can offer an attractive return profile for investors, they said, “particularly in the current uncertain times”.
Below, Numis highlights five investment trusts that investors worried by the coronavirus might want to consider.
RIT Capital Partners
First up is the £3.6bn RIT Capital Partners trust, which the Numis analysts rate as a core long-term defensive holding. The trust aims to deliver long-term growth with capital preservation by investing in a range of listed and unlisted investments, such as long equities, real assets, private equity and absolute return strategies.
Since the start of the year (to 2 March), it has recorded a loss of 9.03 per cent compared with a fall of 3.91 per cent for the average IA Flexible Investment peer.
However, the Numis analysts say this is more likely due to the fact that the trust has monthly NAV (net asset value) reporting data and is trading at a narrower discount than its peers.
Performance of trust vs sector YTD
Source: FE Analytics
“For investors wary of volatile markets, we believe it is an interesting time to look at the fund,” said the analysts.
“The portfolio remains defensively positioned, with the emphasis on capital preservation. Since inception in 1988, RIT Capital has delivered an attractive return profile, participating in a significant amount of the market upside whilst insulating against market declines.”
Over the 10 years to last month-end, it has made a total return of 117.94 per cent against a 65.42 per cent rise for the peer group average.
The trust is currently trading at a discount to NAV of 3.2 per cent, is 11 per cent geared and has ongoing charges of 0.68 per cent.
Capital Gearing Trust
The next trust investors should consider is Capital Gearing, which the analysts said has an even more defensive approach than RIT Capital and a greater focus on preserving capital. Capital Gearing is managed by Peter Spiller, Alastair Laing and Chris Clothier and targets an absolute total return over the medium-to-long term.
“The portfolio continues to be very defensively positioned, with a low allocation to equities and an emphasis on inflation protection in the fixed income portfolios,” they said.
“Although 34 per cent of assets are invested in listed equities/funds, most of this is represented by specialist property vehicles or funds investing in alternatives – infrastructure and loans.”
Currently, 31 per cent of the portfolio is held in index-linked government bonds while 19 per cent is invested in conventional government bonds. A further 10 per cent is in preferred shares and corporate debt.
The £482.1m trust is currently trading at a 0.9 per cent premium to NAV, is not geared and has ongoing charges of 0.68 per cent.
Personal Assets Trust
FE fundinfo Alpha Manager Sebastian Lyon’s Personal Assets Trust is the global defensive strategy next to get the nod from the Numis analysts.
The £1.1bn trust – which aims to protect and increase investors funds per share over the long-term – invests in four ‘pillars’: quality-growth stocks, index-linked bonds, gold and cash.
“Portfolio turnover is extremely low and equity exposure is focused on US and UK blue-chip companies with pricing power in defensive industries (e.g. tobacco stocks, Coca-Cola, Nestle and Microsoft),” said the Numis analysts.
Performance of trust vs index & sector over 5yrs
Source: FE Analytics
Over five years – the recommended holding period for investors – Personal Assets Trust has made a total return of 29.29 per cent, outperforming the FTSE All Share’s 22.54 per cent gain and a 34.46 per cent return for the average IT Flexible Investment peer.
The trust is currently trading at a 0.9 per cent premium, is not geared and has ongoing charges of 0.91 per cent.
Ruffer Investment Company
Another trust with capital preservation at its core is Ruffer Investment Company, with Hamish Baillie and Duncan MacInnes believing the greatest risk comes from the onset of inflation.
“As a result, 30.1 per cent of the portfolio is invested in inflation-linked securities, with a further 7.6 per cent weighting in gold and gold mining equities,” the Numis analysts said.
“The fund performed particularly well during the global financial crisis with the NAV up 26 per cent in 2008 compared to a 30 per cent fall in the FTSE All Share, although recent performance has been more muted versus peers and equity markets.”
As such, Ruffer Investment Company has made a loss of 5.53 per cent over the three years to 3 March, compared with a 10.15 per cent gain for the average IT Flexible Investment peer. Longer-term, however, the trust has made stronger gains of 36.45 per cent over 10 years but still lags the peer group, which is up by 66.71 per cent.
The £406.5m trust is currently trading at a discount of 2.2 per cent, is not geared and has ongoing charges of 1.13 per cent.
Aberdeen Diversified Income and Growth
Finally, Numis highlighted the £460.6m Aberdeen Diversified Income and Growth trust overseen by Tony Foster, Mike Brooks and Emma Scott.
“Aberdeen Diversified Income & Growth seeks to offer a portfolio that is genuinely diversified by asset class, in contrast to many ‘multi-asset’ funds that primarily invest in equities and bonds,” the Numis analysts said.
As such, the portfolio includes direct and indirect (via third-party funds) exposure to a range of asset classes like emerging market bonds, asset-backed securities, global loans, infrastructure, property and private equity.
“The managers seek to manage risk through diversification rather than by investment in low return assets such as government bonds, investment-grade credit or gold,” the analysts added.
Performance of trust vs sector & benchmark YTD
Source: FE Analytics
Since the start of the year to 3 March, the trust has made a loss of 2.24 per cent, underperforming its Libor GBP 1 Month + 5.5% benchmark, which is up by 1.04 per cent, but outperforming the average IT Flexible Investment peer’s 2.78 per cent loss.
The trust is currently trading at a discount of 7.2 per cent, is 19 per cent geared, has a yield of 4.9 per cent and ongoing charges of 0.62 per cent.