UK listed PP-type fund

[stone]

Is the closest thing to a UK listed PP fund the "Personal Assets Trust".
http://www.patplc.co.uk/index.php
My only worry might be whether they in future might have the freedom to drift further away from a PPesque strategy. It holds 14% gold and the remainder being split evenly between US treasuries (including TIPs) and UK and US "blue chip" stocks. They even seem to comprehend default risk for treasuries! From their blurb:

Government defaults can happen
(Greece has been desperately trying
to avoid one), but it is very
rare indeed for countries with their
own currency to default through
anything other than inflation and
we would be utterly astonished if
this happened to the US. While
Greece's problem is that it cannot
devalue the Euro, the UK and the
US have retained control over
their own monetary policy. This
being so, it is obviously much easier
and less controversial for their
central banks to print money in the
time-honoured manner, to bring
about inflation and a devaluation
of the currency, than for them to
take the extreme and embarrassing
course of a formal default.

[magneto]

Personal Assets Trust had drifted in style following the death of Ian Rushbrook and the appointment of Sebastion Lyon.  While very defensive it is very far from being a PP by using substantial TIPS etc, and not holding long term nominal bonds as far as I can determine from last annual report.

Good core defensive holding but not a substitute for PP.

[magneto]

Also the gold holding is a temporary holding and they may sell out when the wind changes.

[stone]

magneto, you seem to have some familiarity with it. I only came across it today. I could see that it wasn't a true PP but seemed closer than any  UK listed fund I'd heard of. Is the current style less or more PP like than it used to be? From my casual brief look, the current balance of it seemed fairly sensible. The 40% stocks looks less overweight when you consider that the stocks are at the lowest  end of the beta spectrum. The 15% gold also seems less underweight considering that it has 25% TIPs and the lack of LTT seems less bad given that the USD exposure might give it some "flight to safety" type upswing when stocks are crashing. Do you think that it is likely to be prone to a calamitous drift in style? I was impressed by how well it seemed to have ridden through the 2000 and 2008 crashes.

For me the possible attraction of it would be as something for a finance-phobic to hold. It might not be beyond hope that my better half might fill up an ISA with it. For some people the idea of holding a bunch of violently volatile assets and rebalancing is beyond the pale. Such a person might be fine with this Personal Asset Trust ??

[longeyes]

Do we have a long-term record for it?  Can Americans buy it?

[magneto]

Stone,

Sebastian Lyon of Troy Asset management took over portfolio management of Personal Assets Trust (PNL) in March 2009.  Troy Asset Management is a fund manager established for the Weinstock family with the same priority of preserving capital before growing it.

Perma Bear Ian Rushbrook died in October 2008, at 'the hour of his greatest triumph just as his long heeded warnings about the US credit and housing bubbles were proving true'.
Ian kept liquidity typically high and used derivatives to protect the remainder of his portfolio (essentially UK stocks with a bias to those with Scottish base).

When Sebastian took over the liquidity was changed using gold and TIPS, and the UK stocks replaced with mainly International esp US stocks.

The two portfolio styles differed dramatically in content but had the same objective of being substantially liquid and therefore defensive awaiting the day stocks become really cheap.

So the performance prior to 2009 was due to Ian's efforts and cannot be used as a record for the present set up.  Never the less we find the style unusual and therefore useful as a diversifier and hold about 1.5% of our portfolio in PNL.

Hope the above assists.

Regards

Magneto

[stone]

magneto, thanks for all that very helpful background. So the current structure is actually only something they have had since  2009. I guess everything hinges on whether they are going to stick to the current seemingly sensible structure. Do you know how well Sebastian Lyon did before 2009 in his previous role? If they were sticking to the current portfolio structure for many years with Troy Asset Management and having presumably decent results- then that would be encouraging.

longeyes, it trades just like a stock on the London market. I guess any US broker that gives you access to the London market would enable you to hold it??

[magneto]

Have no information on how well Sebastian Lyon or Troy Asset Management have performed for the Weinstock family.  Troy also run an UK Income & Growth fund having taken over management recently which can be googled.

Thinking about your better half's reluctance to take risk, have you considered RIT Capital Partners (RCP).  Reading the report and seeing who the fellow stakeholders are might reassure and encourage a small toeholding.

Quote from last annual report 'Over the last ten years RIT's net asset value has increased by 161.1% and the net asset per share by 166.2%.  Over the same period the Group's main benchmark, the MSCI World Index (in sterling), increased by 11.1%.'

[stone]

magneto, before I became a PP follower, I had contemplated Rothschild Capital Partners IT as a sort of asset class of its own. I guess it is a market timing vehicle that sometimes works very well but sometimes screws up badly (eg in 2008). It has made up the lost ground since then but the 19% premium to NAV looks very very scary to me. If they mess up and NAV drops by 20% overnight, then the price could easily drop by 60%. You are then left just with the faith that they will come good in the end as they have in the past. I prefer holding less mysterious things where I more or less know what they contain all the time. I think Rothschild Capital Partners IT is wildly more risky than my better half would contemplate. I suspect she has ever heard of the Rothschild family. She's a cash savings person. For her not loosing nominal value is everything.

[magneto]

Hi Stone

Hmmm well that idea didn't go down very well!

I split and classify Investment Trusts as either defensive or aggresive dependent on their historic performance in falling and rising markets and bias (note bias not bet the farm) allocations among twenty odd ITs based on whether the market seems under or overvalued.  RCP has so far fallen into my defensive category based on past performance, probably due to it's unusual mix of assets and the use of liquidity.

Wouldn't counter-argue your points which are valid, although the premium is I think about 10%, and the downside may be pessimistic, but better safe than sorry for your better half.

Being that cautious then anything with exposure to equities is ruled out including PNL so with interest rates below inflation can't think of anything safe to protect cash other than by buying NS&I IL certs as they become available to counter inflation.  (We are great fans of NS&I IL certs as a long term store of value and the default location for cash.)

Good Luck and Best Wishes

Magneto

[stone]

Magneto, I'm unnerved that I had such an inaccurate view. You are quite right about the premium. It is 10.8%. I don't know where I got that 20% notion from- sorry. Also I see they had a max price drawdown of only 24% in the 2008 crisis. About RCP IT moving into cash- my worry was that they move in and out and sometime mis-time (though nothing like as badly as my ill-informed former post made out). I hold NSI ILSC and I had hoped I had evangalized about them enough but not in time before they were withdrawn from sale:). Although we have had entirely joint finances for 16 years, when it comes to what to do with savings we have quite different outlooks. I say inflation cuts cash by several percent per year- she says that she doesn't mind that so long as I don't bring the subject up .