Thursday, 25 November 2021

Personal Assets Trust - Update

This 'Steady Eddie' capital preservation investment trust was added to my portfolio back in 2013...sold a couple of years later but then re-purchased in May last year as I was re-evaluating asset allocation following the Covid-19 shock to global markets.


The trust has this week published results for the half year to end October 2021 (link via Investegate)

Over the past 6 months, net assets have increased by 5.9% (total return) compared to 5.4% for the FTSE All Share index. Over the past 3 years the returns were 28.8% and 17.6% respectively. The trust's share price is maintained close to NAV and the price has increased by £22.00 to £493 since April.

At the end of the period, asset allocation remained defensive with liquidity at 59.3% (cash, gold and bonds etc.).

I was really pleased to note that the trust has now sold its last tobacco holding, Philip Morris which was previously my main concern. I was hoping they would consider dropping this unethical holding and I am sure my email correspondence on the subject last year swung the decision!  They also disposed of Buffett's Berkshire Hathaway, one of the reasons being the management have not yet fully grasped the ESG nettle.

3 Yr Share Price v FTSE All Share
(click to enlarge)

Commenting on the results, investment manager Seb Lyon said:

"For the past two decades, with a few brief exceptions, we have lived in an era of benign inflation.  Central banks, if anything, have been fighting deflationary shocks since the Asian and Long-Term Capital Management crises of the late 1990s and, more recently, the Great Financial Crisis of 2008, followed by the Eurozone debt crisis of 2011.  Investors may be ill-prepared for rising interest rates; fixed income investors offered low nominal and negative real returns are being driven to higher-return equities, which supposedly offer 'real' protection.

The discount rate, the basis of which is determined by the 10-year US Treasury yield, is key.  Equities have been supported by four decades of falling interest rates.  Should this dynamic change, investors may be in for greater volatility as the support from low rates is questioned.  This raises uncertainty over the value of the expected growth in earnings from equities, which becomes less precious when eroded by inflation.  A battle lies ahead between the 'inflation-protecting' qualities of stocks and the threat of nominal interest rate rises in the future. There is a risk that some 'alternative assets' such as highly geared real estate similarly may not offer much defence.

We consider these risks when structuring the Trust's portfolio.  Gold bullion and inflation-protected securities provide a foil for our equity exposure, which in turn is focussed on durable, profitable companies that continue to grow and have pricing power.  Looking ahead, the Trust's liquidity will provide both downside protection and the ability to add to our equities as opportunities present themselves, as we did in the first quarter of 2020".

The trust has paid a small dividend of £5.60 p.a. (paid quarterly) for several years and this is likely to continue for the foreseeable future. This gives a current yield of 1.1%.


Currently equities make up 40% and top portfolio holdings include Microsoft (6.2%), Google (6.0%), Unilever (3.6%), Nestle (3.6%), Visa (3.4%) and Diageo (3.2%).

US index linked bonds make up just over 30% with cash and UK treasuries a further 21%. Gold accounts for just under 8% of the portfolio.

The shares were re-purchased for my portfolio at £432 last May and have advanced to currently £501... just off their all-time high point.

The US markets continue to march onwards & upwards but with rising debt levels resulting from Covid, inflation on the rise and the threats posed by climate change, I think in these uncertain times it's probably a sensible idea to think about the potential downside of the markets and with an eye on capital preservation. I have also added the Trojan Ethical fund to my green portfolio which is managed by the same stable on very similar lines. 

I topped up my holding in both earlier this year and these two combined make up around 12% of my portfolio...up from 6% at the start of this year.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!


  1. Timely update - I've been switching some of my bond ETFs to defensive ITs and this will be one of them, along with RIT Capital, Ruffer and Capital Gearing. I haven't switched out of all my bonds, not yet anyway!

    1. Nice one weenie...looks like there's some market jitters with the outbreak of the latest Covid variant so, as you say, maybe a good time to switch.