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Fidelity’s suspension of RIT Capital Partners ‘a good reason to find an alternative platform’

31 July 2023

New investments into the private-equity-heavy trust have been restricted by Fidelity.

By Matteo Anelli,

Reporter, Trustnet

Fidelity has suspended new investments into RIT Capital Partners, one of the largest and most popular trusts in the IT Flexible Investment sector.

The move feels like a follow-up to what happened in January 2023 to abrdn Private Equity Opportunities, which was also suspended from the platform without a specific explanation.

For some, it is hard to understand this decision, with James Carthew, head of investment company research at QuotedData, expressing his doubts.

“Fidelity has a track record of kicking investment companies off their platform without deigning to explain why,” he said.

“I think this is a good reason to find an alternative platform.”

The £2.9bn trust has been making headlines since January, when the Telegraph’s Questor gave it a ‘sell’ note due to its tilt to private equity – a riskier way to invest than in listed companies that’s nevertheless backed by some retail investors, who now invest circa 8% of their portfolio in unlisted businesses.

They do so for multiple reasons: because companies are staying private for longer, to get access before the mainstream, for insights to future market leaders, lower-cost access and diversification.

Managed by J. Rothschild Capital Management, RIT Capital Partners has been struggling since the end of 2021. From its peak to today, it has lost close to 27%, as the chart below illustrates.

However, analysts have been backing it for its ‘excessive’ discount, currently at 17.51%. It was also highlighted on Trustnet as a good trust to hold for a lifetime.

Performance of fund over 10yrs

Source: FE Analytics

“RIT Capital is a vehicle designed for long-term investors and these have been rewarded with 10-year NAV and share price returns in the first quartile of its peer group. Rising interest rates were the trigger for weakness in the share price. However, the peak of rates is not far away,” said Carthew.

“The current share price discount to NAV is near its all-time widest, making it a particularly poor time to rush for the exit. In addition, analysts have been pondering whether some of its unlisted investments might be ripe for harvesting, which in the past has tended to lead to NAV uplifts.”

Both Fidelity and RIT Capital Partners have been approached for comment but did not immediately respond.

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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.