Shares in RIT Capital Partners (RCP) ticked 0.6% higher to £25.70 as the capital preservation trust reported an impressive 19.1% net asset value (NAV) total return for the half ended 30 June 2021, outperforming both inflation and the MSCI All Country World Index’s 12.2% return.
Private investments generated particularly strong returns for the flexible investment trust, notably the successful initial public offering (IPO) of South Korean e-commerce giant Coupang.
For the uninitiated, RIT Capital Partners, where Lord Rothschild and family hold sway with a significant holding, has the objective of long-term capital growth while preserving shareholders’ money through market cycles. It invests in a diversified, international portfolio across a range of asset classes, both quoted and unquoted.
Many developed markets posted low double-digit gains in the first six months of 2021, despite continuing Covid-19 concerns and notably higher inflation figures.
Beneath the surface however, the situation was more volatile, with material rotations between market-leading sectors, regions and themes, resulting in a wide dispersion of underlying asset returns.
Against this backdrop, the multi-asset trust managed to generate positive contributions across the majority of asset categories, with private investments in particular producing strong returns, underpinned by the successful IPO of Coupang, a company feared and admired by competitors in equal measure and regarded as a rival to Amazon in South Korea.
RIT Capital’s quoted equity category also contributed positively during the half, led by cyclical positions buoyed by increased economic activity as well as some strong single stock picks.
The absolute return and credit book continued to provide ‘steady and largely uncorrelated returns, in particular from distressed debt managers’, while the relative strength of sterling was the main detractor to performance in absolute terms.
NAV HITS ALL-TIME HIGH
RIT Capital Partners’ NAV per share reached £27.11 at 30 June 2021; a new all-time high representing a total return (with dividends reinvested) of 19.1% over the half year.
The investment trust said it bought back shares when they were trading on a high single-digit discount and that it intends to continue to purchase shares in the market when viewed as beneficial.
RIT Capital Partners paid a first interim dividend of 17.625p in April and today declared a second interim dividend of the same amount, providing shareholders with a total dividend in 2021 of 35.25p, a modest 0.7% increase over 2020.
REMAINING VIGILANT
In the outlook statement, RIT Capital Partners’ managers commented: ‘While the results so far this year, and over recent years, are pleasing, we nevertheless remain vigilant, and will not hesitate to adjust the portfolio should the need arise.
‘Experience suggests that when there is a widespread consensus, investors can often get trapped in a false sense of security and let their guard down. As we emerge from the most serious public health crisis in modern times, with systemic market uncertainties remaining, this is not the time to relax. And rest assured that we will not.’
