Fund Profile

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Disclosure – Non-substantive Research

This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour. 

Overview
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Overview

RIT Capital (RCP) aims to generate long-term capital growth and to protect shareholders’ capital. The managers invest the portfolio in a broad range of asset classes – both directly and through third-party managers – which are expected to deliver differentiated returns.

RCP now has net assets north of £3.6bn (having listed in 1988 with £280m) and a senior management team that have been working together for over nine years. The team have a wide network of contacts and relationships, which provide many investment opportunities. They believe that their propriety network of contacts and their permanent capital give them a distinct edge in finding the best opportunities in any asset class on a global basis.

RCP’s team have a consistent investment philosophy, aiming to identify differentiated sources of returns that, when combined, will deliver strong returns with lower volatility. Fundamentally, the managers are thematically driven, and use their world view to set risk levels as well as look for profitable investments. They balance natural caution with strong structural themes, as well as retaining the ability to be opportunistic.

2020 proved to be a good example of how this approach can work well, as shown by the strong NAV total returns RCP delivered over 2020 and, so far, this year. That said, it also illustrated the risks of investing in trusts on a large premium. Whilst the NAV per share increased by 14.4%, the share price fell by 2.4% (both excluding dividends), reflecting the premium to NAV of 5.5% at the start of the year giving way to a discount of c. 10% as at 31/12/2020.

Look-through management fees are c. 1.48% before performance fees. The most recent KID Reduction in Yield is 4.1%.

Kepler View

RCP is a differentiated trust, and it has a strong track record of achieving its twin objectives of growing and protecting wealth. 2020’s NAV performance has shown how strong the model is, with the team having started the year with net listed equity exposure in the low 40%’s, mitigating downside in Q1 2020 before delivering strong absolute returns subsequently. Over the past three years, RCP’s NAV volatility was around half the volatility of its equity benchmark but delivered cumulative outperformance of c. 1.9%.

We characterize RCP as aiming for a lower beta than the equity market but harnessing alpha to generate strong risk-adjusted returns over the long term. The different drivers to returns for each of RCP’s six ‘cylinders’ is key to how they achieve this. RCP’s proprietary network is an advantage, as is the nature of their ‘permanent capital’, not to mention the c. £4bn of assets. Investing in private companies has always been a key part of the strategy, and the last 12 months has seen a particularly strong contribution from this part of the portfolio.

RCP publishes its NAV monthly. Notwithstanding the difficulty of accurately assessing the actual discount or premium on a specific day, RCP’s shares have traded on a premium for most of the last five years. Over 2020 however, the shares derated to a discount, which seemingly persists at the time of writing (next NAV due mid-April). For long term investors, this could be an opportunity.

BULL
BEAR
Highly-diversified portfolio, offering access to a full range of asset classes and many soft-closed or inaccessible managers
Monthly NAV announcements mean it is hard to ascertain what the current discount (or premium) really is
Long-term performance track record, which has seen the trust protecting capital well in falling markets and delivering strong cumulative returns
Higher costs than a typical fund, but then again – this is not a typical fund
Unique approach, with very few comparators in either closed or open-ended fund worlds
Opaque portfolio may not give granularity of underlying exposures that some investors may want
Continue to Portfolio
2024 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for growth... Find out more

Fund History

23 Oct 2024 Fund Analysis
RCP’s evolution with a new CEO…
12 Jun 2024 How do you like them apples?
We do our best to categorise the trusts in the Flexible sector, many of which share little common ground...
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
14 Sep 2023 Risk on, risk off
Capital preservation trusts are maintaining historically low equity levels, despite the rally seen so far in 2023…
01 Aug 2023 Results analysis: RIT Capital Partners
RCP’s interims highlight the inherent defensiveness within the portfolio…
22 Mar 2023 Fund Analysis
RCP’s recent performance - for good and bad - has been driven by private investments…
19 Oct 2022 Gimme shelter
Our analysts examine safe havens and defensive strategies as we endure the market's 19th Nervous Breakdown...
06 Jul 2022 A game of two halves
In the second article of our series on the AIC Flexible Investment sector we see how performance has stacked up during two years when markets were poles apart...
25 Mar 2022 Fund Analysis
RCP continues to deliver good risk adjusted returns…
21 Jul 2021 Every which way but loose
We break down the AIC Flexible sector into more useful segments…
16 Jun 2021 A better class of travel*
Sharing many features of a traditional family office, investment trusts offer a sophisticated, cost effective solution for managing family wealth...
30 Mar 2021 Fund Analysis
RCP continues to deliver on its aims of long-term capital growth while preserving shareholders’ capital...
19 May 2020 Shuffling back towards the door?
Equity markets have rebounded strongly… should you be de-risking your equity exposure?
29 Apr 2020 On solid ground
Our analysis of discounts highlights trusts which are likely to offer significantly less discount downside from the current level…
01 Apr 2020 Mind the gap
Discounts have yawned across trusts investing in private companies, but appearances can be deceptive and as COVID-19 unfolds it pays to take care…
30 Jan 2020 Is it time to run away?
With a sense of complacency in the air, our analysts debate the best ways to shore up your portfolio's defenses...
19 Jun 2019 Fund Analysis
Aiming to deliver long-term capital growth, while preserving shareholders’ capital...
30 Jan 2019 The Growth Portfolio
Our ten investment trust picks for long-term capital growth...
25 Jul 2018 The Endurance Growth Portfolio
The purpose of the Endurance Growth Portfolio is to generate long-term capital growth with a bias towards quality and defensive characteristics...
27 Jun 2018 A winning combination
New research from Cass Business school helps explain why closed-ended funds have outperformed their open-ended peers in the major equity sectors since 2000...
19 Apr 2018 Fund Analysis
A highly diversified portfolio of public and private investments, offering access to a full range of asset classes and many soft-closed or otherwise inaccessible managers
28 Feb 2018 Gimme shelter
As the bear market for bonds and corresponding volatility in equities escalates we examine trusts that offer excellent capital protection..
24 May 2017 Hard knocks
Our long term growth model portfolio suffered a serious setback when the Brexit vote came through, but has lived up to its name since then...
24 May 2017 Fund Analysis
Highly differentiated from the majority of other trusts by active equity and currency exposure, with a completely benchmark agnostic approach
12 Jul 2016 Fund Analysis
12 Jul 2016 Riders on the storm
Multi-asset investment trusts for an environment where a global, active, currency-aware approach is essential...
12 Jul 2016 Taking the bull by the horns
We examine the boards which have done most to fight for their shareholders' interests in an unforgiving arena...
01 Dec 2015 Model Portfolio update: Empiric, Edinburgh and RIT Cap...
The latest insight into developments across our three model portfolios...
07 Sep 2015 RIT Cap stands out amid market chaos
RIT Capital, the most risk averse member of The Endurance Growth Portfolio, has eked out a positive return against a backdrop of plunging markets this summer
10 Jun 2015 The Endurance Growth Portfolio
Five investment trusts with outstanding long-term growth prospects
View all

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Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.