Here are three multi-asset options for investors who are ready to take advantage of the various advantages associated with trusts.
Personal Assets Trust
While the Personal Assets Trust uses a pure equity index – the All Share – as its benchmark, this is very much a multi-asset portfolio.
According to FE Analytics, it holds 49.5 per cent in equities – including significant positions in Canada and Australia – 14 per cent in physical gold and 36.5 per cent in short-dated treasury bills.
FE Alpha Manager Sebastian Lyon is best known for his £2bn Trojan fund, but those who backed his Personal Assets Trust when he took over in March 2009 have fared even better than those who opted for his open-ended option.
Performance of fund, trust and index since March 2009
Source: FE Analytics
According to FE data, Lyon’s trust has returned 73.23 per cent over this period, compared with his fund’s 55.28 per cent.
Both multi-asset portfolios have, however, underperformed their FTSE All Share benchmark, but it is important to remember that Lyon took charge of the trust at the very bottom of the market in the aftermath of the Lehman Brothers crash. Moreover, both fund and trust have been significantly less volatile over the period.
The trust has a total expense ratio (TER) of 1.15 per cent and is trading on a premium of 1.6 per cent. It implements a discount control mechanism (DCM) by buying back shares if the discount widens considerably and issuing shares if the premium increases.
Ruffer Investment Company
FE Alpha Manager Steve Russell’s £282.5m trust currently has 52 per cent in equities, with the rest split between gold bullion, gold equities, index-linked bonds and cash.
Its two most significant positions are Japan equities, which have a 22 per cent weighting, and index-linked sovereign bonds, which have a 21 per cent weighting.
In a recent interview with FE Trustnet, Russell said the Ruffer team anticipates a high inflationary environment as a result of sustained quantitative easing, which he believes suits both Japanese equities and index linkers.
The trust’s use of alternative assets has held it in good stead over a turbulent five-year period: according to FE data, the Ruffer Investment Company has returned 90.63 per cent during this time – more than any mixed-asset fund in the open and closed-ended universes.
Much of this outperformance is thanks to its stellar record during the 2008 downturn, when it managed to make gains of 23.01 per cent. While the trust doesn’t use a benchmark, by point of comparison, the FTSE All Share lost 29.93 per cent.
Year-on-year performance of trust vs index
| Name | 2011 returns (%) | 2010 returns (%) | 2009 returns (%) | 2008 returns (%) | 2007 returns (%) |
| Ruffer Investment Company | -2.8 | 19.02 | 22.07 | 23.01 | 5.17 |
| FTSE All Share | -3.46 | 14.51 | 30.12 | -29.93 | 5.32 |
Source: FE Analytics
A high exposure to Swiss government bonds, gold, Japanese yen and UK short-dated gilts all contributed to its strong run in 2008.
The trust has an annual management charge (AMC) of 1 per cent and is trading on a premium of 2.8 per cent. It also uses a DCM.
Industry stalwart Jonathan Ruffer still has an advisory role in the running of the trust, but Russell and Hamish Baillie are listed as primary managers.
Capital Gearing Trust
Among the most popular investment companies with retail investors is Peter Spiller’s Capital Gearing Trust. While the portfolio is often referred to as a trust of investment trusts, it also has single positions in equity and fixed interest securities.
Most of the trusts held within the portfolio are pure-equity ones, but some have a property, fixed interest or multi-asset focus.
Among Spiller’s biggest closed-ended positions are Advance Developing Markets and Miton Worldwide Growth IT. Single positions in inflation-linked US, UK and Swedish government bonds dominate the top-10.
Performance of trust vs index over 10-yrs
Source: FE Analytics
The trust has among the best risk-return record of the last decade, delivering 185.64 per cent with an annualised volatility of 9.84 per cent.
By contrast, its FTSE Investment Companies index has returned 139.36 per cent with a volatility of 16.92 per cent.
The success of the trust is reflected in its significant premium, which currently stands at 9.2 per cent. It has a TER of 1.29 per cent. Spiller, who started running the fund in 1982, is one of the longest-standing managers in the industry.