While I feel this post would be more suited to the Portfolio Management & Review pages of this site I’ve included it as part of this thread because sections concern the Capital Gearing Trust (CGT).
From the off I’m going to nail my colours firmly to the Capital Gearing Trust mast, and it’s all due to the efforts one man –
Peter Spiller. We're both of the same age and I’m old enough to remember Peter Spiller back in the late 1980s when he was single-handedly running Capital Gearing with assets of less than £3-million to play with. It’s nothing short of staggering that after 39 years Peter Spiller is still in place running the trust (with the help of two co-managers who very much think like he does), but with a now market capitalisation of £746.5-million when last I looked. His highly idiosyncratic style of portfolio construction has always intrigued me, and has been very much informed by the work of
Harry Markowitz. Spiller readily admits that, as an inexperienced thirty-something, his then employer Capel Cure & Meyers took a chance on letting him run the then distressed Capital Gearing, the only other alternative in 1982 being to wind the trust up.
For more than 25 years, while I was happy to watch from the sidelines, I always backed away from getting involved with Capital Gearing as a shareholder because …
(i) I was ultimately investing with an early retirement goal in mind, and the need to establish sustainable dividend cash flows, rather than seek total returns, to help bridge a pension gap.
(ii) Until the introduction in 2015 of an aggressive
Discount/Premium Control Policy Capital Gearing shares always traded on a double-digit premium to the NAV which tended to put me off.
In 2006 I was able to start drawing my DB pension, my State Pension not coming on-stream until 2011. Also, by 2011, I had accumulated £150,759.97 in what were referred to as
Free Standing Additional Voluntary Contributions (FSAVCs). Fortunately, with help of a shared inheritance, a steady flow of ISA sheltered dividends from a stable of usual IT income paying suspects, underpinned by DB and State Pension payments, I didn’t need to make a call on my FSAVCs. In due course, that transfer value of £150,759.97 was moved to a SIPP with Alliance Trust Savings (ATS), and invested accordingly along total return lines – as referenced in this
Lemon Fool post of 21st February 2019.
Now residing with ii, following the acquisition of ATS, this is what my SIPP looks like at the close of yesterday's business –
Click Here …
Slide 1 - Overview
• Current Portfolio Value: £460,179.69
• 205.2% gain since 29/10/2011
• Represents a 12.3% CAGR over a duration of 9.6 years
• No funds added or drawn down since established
• Current Holdings … HSBC FTSE All World Index Fund (Acc Units) –and– Capital Gearing Trust (Dividends Reinvested) 50/50 split
Slide 2 - Asset Allocation (using Morningstar Instant X-Ray Tool)
• 63.17% Stocks
• 21.66% Bonds (mostly US and UK inflation linked with some short-dated)
• 3.46% Cash
• 11.71% Other (mostly REITs of the Beds & Sheds variety and some Gold)
Slide 3 - Geographic Allocation (using Morningstar Instant X-Ray Tool)
• 29.90% Greater Europe
• 47.92% Americas
• 22.17% Greater Asia
Slide 4 - Fees (using Morningstar Instant X-Ray Tool)
Slide 5 - Performance of the current two holdings (using Morningstar Instant X-Ray Tool)
• Measured from 31/07/2014 when HSBC launched its FTSE All Word Index Fund
• Note the low Standard Deviation numbers for 3 and 5 Years
• Also note the corresponding Alpha and Beta numbers for 3 and 5 Years. Ideally, I’m looking for an Alpha number above 0 and a Beta number below 1.
In my post of 21st February 2019 the question I was asking myself is still the question I’m asking myself 28 months later. I know a market “reversion to the mean” is waiting out there somewhere; the unknown is where and when. Unfortunately, with each passing year I'm acutely aware that I’ve got less and less time available to me to recover. Furthermore, I just can’t convince myself that going forward developed economies will continue on their merry way debasing currencies by printing money in order to inflate their way out of the debt pile they are under. Over the next ten years I’ve come to believe that I have next to no prospect of generating on-going SIPP returns of anything like the 12.3% per annum of the previous 10 years.
Turning the clock back to 29/10/2011 I set my SIPP the task of quadrupling the opening balance of £150,759.97 to £603,039.88 (effectively the Rule of 72 applied twice) over a 20-year period at an implied CAGR of 7.2%. Obviously, after 9.6 years an annual performance of 12.3% is way ahead of that 7.2% schedule. So much so, a CAGR of 2.6% is all that is required over the remaining 10.4 years to hit the target of £603K. While I confidently expect a shorter wait than 10.4 years, one never knows, the markets will do what the markets will do, and there’s not a thing anyone can do about it. So I made the call to circle the wagons into a defensive position as best I could by diversifying across asset classes and geographic locations at relatively low cost.
Before anybody asks what I intend to do with hoped for proceeds of £603K, it’s earmarked to buy an annuity that will self-fund my social care dotage to a comfortable standard. In the event I should fall off my perch before then, with no legacy issues for me to consider, a certain charity will be in for a nice payday.
Anyone interested can download the most recent Capital Gearing Annual Report and Financial Statements for the year ending the 5th April 2021 –
Click Here Interesting to note – substantial shareholders listed on page 24
• 7.1% LGT Vestra (which I’ve discovered is the banking and asset arm of the Princely House of Liechtenstein)
• 2.9% Peter Spiller (aka Skin in the Game)
Also available to download is the most recent Capital Gearing factsheet for the month ending 31st May 2021 –
Click HereI had vainly hoped to be in attendance at London’s Moorgate for the 58th AGM scheduled for Tuesday, 6th July 2021, but sadly its in closed session for the second year running due to Covid-19 restrictions. I will just have to make do with a shareholder video presentation set to be posted on the Capital Gearing Trust website shortly following the AGM.