Comments on: RIT Capital Partners: Still On The Defensive

By: ITinvestor

ITinvestor — Thu, 25 Apr 2019 11:06:44 +0000

RIT has just announced that Lord Rothschild is stepping down as Chairman on 30 September 2019 following a few years of succession planning.
https://investegate.co.uk/rit-cap–partners–rcp-/rns/lord-rothschild-to-become-president-of-rit/201904251147570885X/

Sir James Leigh-Pemberton, a director of RIT from 2004 to 2013, is to become Chairman.

Interestingly, the RIT share price has barely budged (down 0.25%) but I guess it may take a while for the market to absorb this. I wouldn’t be surprised if the premium to net asset value fell back a bit over the next few months.

By: ITinvestor

ITinvestor — Mon, 08 Apr 2019 11:36:40 +0000

In reply to chrisB. Fair enough chrisB. I think everyone needs to find a path that works for them and they feel they can stick with.

By: chrisB

chrisB — Sat, 09 Mar 2019 15:58:23 +0000

I can see why some-one may like a ‘one stop shop’ such as RIT to invest prudently, and then forget about investing and do something more interesting.

But for me, and others interested in investing, the additional management charge has never appealled because this trust does what I can do myself: diversify risk by buying a couple of global trusts, a couple of smaller companies trusts, a couple of REITs, a couple of fixed income/bond ETFs and maybe a gold ETF and commodies ETF. Throw in a pinch of private equity trust for some extra flavour. Job done.

Perhaps the magic RIT blend will beat my own blend every year for the next 30 years. Or perhaps not. But one thing’s for sure, I’ll save myself a heck of a lot of RIT fees along the way.

By: Mickey

Mickey — Fri, 08 Mar 2019 11:55:47 +0000

Thanks. I agree that costs are a concern, the drive towards lower fees via passives has helped the active side of the industry to sharpen their game in that respect!

By: ITinvestor

ITinvestor — Fri, 08 Mar 2019 11:35:42 +0000

In reply to Mickey.

Thanks, Mickey — glad you like the blog.

I’d agree that performance ultimately trumps costs, but of course the former can ebb and flow while the latter racks up year after year 🙂

By: Mickey

Mickey — Fri, 08 Mar 2019 11:18:22 +0000

As a holder of RIT the current premium is concerning, it has been slightly higher of late when I saw report of a sell note by one firm. Costs are seemingly high by any calculation, I use the AIC lists rather than the KIID’s which are a poor document imho.
I think the concern over costs gets mixed up a little in that sometimes they are seen as more relevant than performance. For me the main test is performance against what I am expecting, so I will judge the costs and performance of my active holdings against relevant passives before selling something because it has a high charge.
Inevsting with the Rothschilds has its plus points as does investing with other family ‘firms’ such as Caledonia, another one whose charges are quite steep but whose discount has recently narrowed considerably from its high of more than -20%. For m e just now, both RIT and Caledonia are on ‘hold’ and remain in the portfolio but with concerns over the discount/premium.
I hope you keep up the good work with this blog, a nice helpoful read.

By: ITinvestor

ITinvestor — Wed, 06 Mar 2019 18:26:56 +0000

In reply to diy investor (uk).

Thanks!

Yes, just over 4% in costs in the KID when I looked at it in this piece.

About 0.7% is the management charge (the standard ongoing charge you see quoted most places), 0.5% is interest on its borrowings, 1.2% is underlying fees on the funds it invests in and 1.8% is the cost of its private equity investments where the private equity firms often have a stake in the underlying companies alongside us mere mortal investors (carried interest is the fancy term, I believe).

To be honest, I am probably a little bit in denial on this. However, it seems like the methodology behind KID cost statements is still evolving, so that makes me a little recitent to sell everything that appears to have a high charge. I’d like to see some more workings on how the KID figures are derived. And the RIT KID dates back to 31 May 2018, so I suspect the figure could change next time it is updated.

Also, I’m finding that where a trust invests in other funds and/or private equity, the costs often spiral and RIT is hardly alone in this. Caledonia is another example and the private equity funds I have, HGT and PEY, also have high costs. So, I’m guessing I am still working through the idea in my mind that either this is just the price of admission for these type of investments or whether I need to take evasive action and vote with my feet. Venture capital trusts also have similar issues. I haven’t been to any IT industry events for a long time, but it’s tempting to rock up and ask some awkward questions!

I don’t remember seeing much on climate change recently either. I guess we need to keep asking questions so it’s on their radar.

By: diy investor (uk)

diy investor (uk) — Wed, 06 Mar 2019 17:39:57 +0000

Nice summary IT and well done with your long-standing investment choice. I hold Capital Gearing which offers a similar promise of capital preservation.

One thing I seem to recall about RCP was high charges – did I see 4% mentioned somewhere? Just wondering what you think on this aspect in the light of recent articles about trust charges.

Finally, no mention of climate change yet in any of the reports I’ve read so far this year…wonder how long cos I am certain it will be on fund managers radar.