In an uncertain world with inflationary pressure and geopolitical conflict, where might you get some certainty?
Capital Gearing Trust (CGT) was listed on the London Stock Exchange in 1973. Through multiple market crises and geopolitical events, the fund has only delivered one year of negative performance in its history (2013), while providing consistent inflation-beating returns.
From 2000 to date, CGT has delivered an annualised return of 8.3% (in pounds) with a standard deviation of 1.7%, compared to the return of 4.1% and a standard deviation of 4% for the UK stock market. Simplistically, CGT has delivered twice the return in this period with less than half the risk.
Peter Spiller has been investment manager since 1982 and founded CG Asset Management (the investment management company) in 2000. He has been joined by two fellow investment managers on CGT in recent years, providing a long-term succession plan.
The trust’s objective is to first preserve capital and to grow real shareholder wealth over time. This means performing in line with inflation in the short term and far exceeding inflation in the long term.
The manager may invest in equities, bonds, cash and commodities with a flexible asset allocation. This allows a minimum 20% equity up to a maximum of 80% equity, ensuring there will always be a mix of assets in the portfolio. The equities are funds — other investment trusts and exchange traded funds (well-diversified portfolios in their own right). The manager may invest in any geographical region, with no limits on country exposure or industry exposure.
The primary holdings as of January 31 2022 are index-linked (inflation-linked) government bonds (36%), property (18%) and equities (17%). The remainder is made up of conventional government bonds (9%), infrastructure investments (7%), preference shares/corporate debt (5%), loans (4%), cash (2%), gold (1%) and private equity/hedging (1%).
A well-diversified portfolio with a demonstrated ability to protect capital and beat inflation with consistency in the long term is hard to ignore, surging inflation and geopolitical risk or no.