Capital preservation trust Personal Assets (PNL) reported a pre-tax profit of £44 million and a fall of 2.2% in net asset value (NAV) per share compared to a rise of 2.4% in the FTSE All-Share Index for the year ending 30 April 2023.

Personal Assets lead fund manager Sebastian Lyon said: ‘This was a dull year for returns; while we would always prefer to make healthy positive real returns, occasionally we must accept they are not always readily available. This is especially true over shorter time frames when starting valuations are high for all asset classes. We are aware that, after a benign period of inflation, the Retail Price Index (RPI) is catching up with us.

'We have positioned the portfolio accordingly, recognising that all asset prices, including equities, bonds and real estate, along with many 'alternatives' such as private equity, will be much more vulnerable in such an environment.’

A DEFENSIVE MIX OF ASSETS

As of the end of April 2023, the trust was invested as follows: 32% in US TIPS (Treasury inflation-protected securities), 22% in global equities, 15% in US short-dated Treasury securities, 14% in UK short-dated Gilts, 11% in gold-related holdings and 4% in cash.

The trust says its aim is 'to protect and increase (in that order) the value of shareholders’ funds per share over the long term'.

Analysts at Stifel commented in a research note: ‘High levels of inflation during the year, particularly in the US, means that the company has again this year earned significantly more income on its holding of US treasury inflated-protected securities (TIPS) than in previous years.

‘Accordingly, to meet the investment trust distribution requirements, the board has resolved to pay an additional special dividend for the year of 2.1p.

‘The board remains committed to paying an annual dividend of 5.6p in line with its policy.’

Shares in Personal Trusts were marginally higher at 471p in morning trading.

FIVE-YEAR RETURNS IN LINE WITH RPI

Lyon says: ‘Over the past five years the net asset value (NAV) total return per share rose by 32.4% compared to the Retail Price Index (RPI) of total return of +33.3% and FTSE total return of +24.2%. The company's NAV and share price (thanks to the discount control mechanism) continued to demonstrate below average volatility compared to peers and the stock market.’

‘Our mandate remains to preserve capital in real terms over the long run and, as such, outperforming inflation remains our objective. Over the past eighteen months the nature of the challenge has intensified, and we expect that inflation will remain higher and more volatile than it has been in the recent past.’

LEARN MORE ABOUT PERSONAL ASSETS

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