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Four trusts aiming to beat the Bank of England base rate

11 May 2023

RBC Brewin Dolphin’s John Moore asks if these trusts have the ability to outpace interest rates.

By Gary Jackson,

Head of editorial, FE fundinfo

Personal Assets and Ruffer are among four investment trusts that aim to beat the Bank of England’s base rate and have a decent chance of doing so over the long run, according to analysts at RBC Brewin Dolphin.

The base rate is currently at its highest point since 2008 after the Bank of England was forced to hike it in an attempt to curb surging inflation. This caused a shock across markets, with stocks and bonds spending much of 2022 falling.

John Moore, senior investment manager at RBC Brewin Dolphin, said: “For some investment trusts, though, it sets down a different challenge. There are several trusts that either directly or indirectly base their performance on what the Bank of England base rate is.

“This was a very different, and perhaps more straightforward, proposition when base rates were at 0.5% for more than seven years. Nevertheless, a trust’s objective should remain consistent – even when circumstances change – and the great news for investors is that all four have highly flexible mandates to deal with changing circumstances.”

Below, Moore looks at these four investment trusts in more detail and explains he thinks they can continue to deliver over the long term.


Personal Assets

The Personal Assets trust, managed by Troy’s Sebastian Lyon, is built around quality stocks, inflation-linked bonds, gold and cash. Moore joked that a performance chart of the trust across most timeframes is “boring viewing”.

“However, this is precisely what the trust intends to accomplish – safeguarding its shareholders' wealth while allowing for some growth potential,” he added.

Performance of Personal Assets vs sector and index under Lyon


Source: FE Analytics

Lyon’s ability to shift between the trust’s four main asset types as conditions require is essential to its success and, over time, Personal Assets Trust has consistently demonstrated its capacity to enhance shareholder value, the analyst said.

“Although it has suffered in the past few months and trades at a greater than average discount, its combination of investments and an approach to changing this mix in a way that is often the opposite of market sentiment should mean it is well placed to bounce back,” he said.


Capital Gearing

Managed by veteran investor Peter Spiller, Capital Gearing Trust provides investors with access to a diverse array of assets such as infrastructure, real estate, zero dividend preference shares, various government bonds, private equity and wider debt securities.

Performance of Capital Gearing vs sector over 20yrs


Source: FE Analytics

Over the past year, private equity and some of the investment trusts within the portfolio have faced challenges, leading to a fall in its share price. Consequently, the trust has experienced relatively higher volatility in recent times, Moore noted.

“While that may continue in the immediate future, with meaningful underlying discounts to asset value in the portfolio just some degree of mean reversion will help the ability to recover and deliver,” he added.


BH Macro

As a hedge fund uncorrelated to equity markets, BH Macro comprises a variety of assets, such as fixed income and foreign exchange instruments, and is designed to capitalise on market fluctuations and asset price disruptions.

It was established to grant retail investors entry into the Brevan Howard Master Fund, which is typically reserved for high-net-worth individuals and other specialised, smaller hedge funds within its group.

Performance of BH Macro vs sector since launch


Source: FE Analytics

While the trust comes with a comparatively high ongoing charge, its unique offering and potential for negative correlation to markets at times could make it a valuable addition to many portfolios, the RBC Brewin Dolphin investment manager said.

“It has been the best-performing trust among the group and thrives on periods of change, which may place it well for the next couple of years,” Moore added.



Ruffer's objective is to generate returns of at least double the Bank of England's base interest rate. The trust holds a broad range of investments, typically focusing on inflation-linked bonds and defensive currencies such as the Swiss franc.

However, undervalued or underappreciated equities, as well as illiquid strategies, also play a role. The equity-based components aim to capture market upswings during risk-on periods.

Performance of Ruffer vs sector and index since launch


Source: FE Analytics

Ruffer notably dabbled in Bitcoin, showing the extensive array of investment options at its disposal. The investment trust structure, with its permanent capital, allows for such approaches without worrying about liquidity issues, Moore suggested.

“The approach is to offer a long only counter-cyclical option that aims to provide stability when other investments are not doing well. Whilst not a hedge fund it does offer a hedge against the approach that most stock market investors might take,” he finished.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.