Thursday, 9 June 2022

Personal Assets Trust - Full Year Results

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 2020 as I was re-evaluating asset allocation following the Covid-19 shock to global markets. Given the unfolding situation in Ukraine this year, it’s looking like one of my better investment decisions.

It’s policy is to protect and increase the value of shareholders funds over the long term and the manager Seb Troy and his team aim to achieve this with a mix of diverse assets including global equities, government bonds, gold and cash.

Troy are committed to maintaining high standards of responsible investment and since 2019 have been members of several climate change associations including The Institutional Investor Group on Climate and Climate Action 100+.

In the past, I have also held Capital Gearing Trust but as it has a significant holding in fossil fuels, it is currently excluded from consideration.


The trust has this week published results for the full year to end April 2022 (link via Investegate)

Over the past year, net assets have increased by 7.1% (total return) compared to 8.7% for the FTSE All Share index. Over the past 3 years the returns were 26.3% and 14.1% respectively. The trust's share price is maintained close to NAV and the price has increased by £20.00 to £491 since April 2021.

Commenting on the results, investment manager Seb Lyon said:

“How do we invest amid these febrile conditions? We have been warning for some time that the barbell 'balanced' portfolio strategy of putting nominal bonds alongside equities is long past its sell-by-date. The short-term negative correlation between the two asset classes has been of great value to asset allocators in diversifying portfolios and producing consistent returns. Bonds have thrived on the back of low inflation and low growth, whilst equities performed during periods of improved economic activity. Over the course of decades however, falling interest rates supported ever-higher valuations for equities and bonds alike.

Today, the short-term negative correlation between the two asset classes seems to have broken down. In a new regime of higher inflation, the risk is that bonds and equities fall together. For this reason we have long preferred index-linked bonds and gold bullion, over conventional bonds, and they have held up relatively well in the recent bond market sell off and should thrive in a negative real interest rate environment, also known as 'financial repression'.

Investors are warned that 'past performance is no guide to the future'. The biggest mistake investors can make is to extrapolate historic earnings, share prices, or valuations. Money illusion, the tendency for people to view their wealth and income in nominal terms rather than recognise the real value adjusted for inflation, is hard to resist. This is the mirage between the nominal and the real and will be the enemy of investors seeking returns ahead of inflation. We will endeavour to continue to preserve and grow shareholders' funds in real terms, but we are under no illusion as to the scale of the challenge ahead”.

The trust has paid a small dividend of £5.60 p.a. (paid quarterly) for several years and this year will pay out an additional £1.40 as a result of the higher than expected income from US inflation bonds. The forward yield is 1.1%.

Ongoing charges are 0.67%.


 At the end of the period, asset allocation remained defensive with liquidity at 62% (cash, gold and bonds etc.). Currently equities make up 38% - down from 46% last year - and top portfolio holdings include Microsoft (5.0%), Google (4.7%), Unilever (3.2%), Nestle (3.1%), Visa (4.1%) and Diageo (2.8%). US index linked bonds make up 36% with cash and UK treasuries a further 17%. Gold Bullion accounts for around 9.5% of the portfolio.

The trust will make it much easier for investors to acquire shares via a 100:1 share split after which the purchase price will be nearer to £5.00 per share rather than £500!

The shares were re-purchased for my portfolio at £432 and have advanced to currently £491.

PNL v FTSE AS Index past 3 yrs

The decision by Putin to send troops into Ukraine in February has created huge global uncertainties. With rising debt levels resulting from Covid, global energy price increases, food and inflation on the rise, the invasion of Ukraine 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. 

The shares are held in both my SIPP and ISA and make up around 12% of my portfolio.

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!

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