Trustnet Magazine Issue 37 February 2018 | Page 22

/ FUND, PENSION, TRUST /
Trust
CAPITAL GEARING TRUST
Peter Spiller’s trust would add some stability to a portfolio with a high equity exposure
120% Capital Gearing Trust (105.94%)
100% FTSE All Share (98.08%)
80%
60%
40%
20%
0%
-20%
-40%
MANAGERS: Peter Spiller, Alastair
Laing & Chris Clothier
LAUNCHED: 1963
PREMIUM/DISCOUNT: +2%
OCF: 0.86%
FE CROWN RATING:
cent from the FTSE All Share and
a volatility score of 13.75 per cent.
It performed particularly well in
2008 and 2011 when markets fell,
making top-quartile returns.
However, it is a bottom-quartile
performer over one, three and five
years, failing to participate in as
much of the equity market upside,
and was hit particularly hard in
2013 around the time of the taper
tantrum.
It may be worth pairing the
investment company with other,
more out-and-out growth-
orientated equity strategies
– though weightings will vary
depending on investor risk
tolerance.
The trust’s shares are at a 2 per
cent premium, according to data
from the Association of Investment
Companies (AIC). It has ongoing
charges of 0.86 per cent. 
PERFORMANCE OF TRUST VS INDEX OVER 10YRS
FILE
market rallies, we believe it is an
attractive vehicle for investors
looking for low-volatility long-
term capital growth.”
The trust’s main aim is to
preserve capital over the short-
term and generate strong risk-
adjusted returns over the long-
term. As well as index-linked
bonds, it is 40 per cent weighted
to funds/equities, further
diversified through underlying
exposure to property, equities,
private equity/hedge funds, loans
and infrastructure.
It has an impressive record of
delivering solid absolute returns
with considerably lower volatility
than that of the equity market.
For example, it has returned
105.94 per cent over the past
10 years, with an annualised
volatility of 8.92 per cent,
compared with a gain of 98.08 per
W
ITH CENTRAL BANKS
AROUND THE WORLD
expected to ratchet up
the speed of interest-rate hikes
this year, the bond market looks
like a poor choice for anyone
looking to shelter their cash
from market volatility. However,
Peter Spiller of the Capital
Gearing Trust is turning to index-
linked government bonds – which
currently account for 37 per cent
of the portfolio’s assets – in a bid
to maintain his solid track record
of preserving investors’ capital.
Index-linked government bonds
will protect against a rise in
inflation, something Spiller – along
with co-managers Alastair Laing
and Chris Clothier – believes is
likely to persist with global debt
levels “unsustainably high”.
“Their view is that this can
only be remedied by a sustained
period of inflation and he points to
signs of rising wage growth in the
US as evidence that inflationary
pressures are building,” said
Kieran Drake, analyst at
Winterflood Investment Trusts.
“While the significant allocation
to bonds will mean that the
fund is likely to lag strong equity
Source: FE Analytics
20
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