Wealth preservers

[Adamski]

Hi All, the wealth preservers, CGT, RICA, PNL, etc have been on the slide now for 12 months. i.e. CGT 12 months -9.6%. PNL done OK over 12 months -1%.

Is it time now to say these are no longer the safe havens they once were, as not done the job of wealth protection in times of crisis, especially in real terms.

Would now say what's the point in holding them? Little upside in a bull market, losses in a bear market? Wouldn't safer bet now be building society savings offering 5.5%.

Your thoughts? Thanks

[BullDog]

They're a waste of time is my thoughts. Putting cash under the bed would have preserved your wealth better recently.

[Lootman]

Hi All, the wealth preservers, CGT, RICA, PNL, etc have been on the slide now for 12 months. i.e. CGT 12 months -9.6%. PNL done OK over 12 months -1%.

Is it time now to say these are no longer the safe havens they once were, as not done the job of wealth protection in times of crisis, especially in real terms.

Would now say what's the point in holding them? Little upside in a bull market, losses in a bear market? Wouldn't safer bet now be building society savings offering 5.5%.

Your thoughts? Thanks

Although they have not preserved all of your wealth, have they perhaps preserved more of it than had you invested the same sum in traditional equity funds?

If so then you could consider selling them and increasing your exposure to shares.

The problem in the last year is that everything is down: shares, bonds, gold, property. So other than going to all cash or risking going short, what could they have done?

[scotview]

The problem in the last year is that everything is down: shares, bonds, gold, property. So other than going to all cash or risking going short, what could they have done?

In the last year gold (physical) is up 8.93%...............................but it is very erratic. If stuff happens in the next few months however it could maybe be a good bet.

[bluedonkey]

Personally I've never seen the point of them. Choose either equities or cash. There's no management fee for a building society account either!

[Lootman]

The problem in the last year is that everything is down: shares, bonds, gold, property. So other than going to all cash or risking going short, what could they have done?

In the last year gold (physical) is up 8.93%...............................but it is very erratic. If stuff happens in the next few months however it could maybe be a good bet.

Ah OK, I was going more by my gold mining shares, which are down, but of course they only loosely follow the spot price of gold.

[mc2fool]

Hi All, the wealth preservers, CGT, RICA, PNL, etc have been on the slide now for 12 months. i.e. CGT 12 months -9.6%. PNL done OK over 12 months -1%.

I take it those are capital only values, not total return. Also, they do seem to have been caught in the general ITs-at-a-discount trend over the last year, as a year ago all were at premiums and now all are at discounts. From their respective AIC pages:

.                          CGT       PNL       RICA
1 Year Share Price TR     -8.0       0.1      -12.8
1 Year NAV TR             -2.4       2.3      - 7.1

Premium  4-Nov-2022        2.32      0.62       1.4
Discount 3-Nov-2023       -3.64     -0.68     - 4.21

Still not great of course, although it's just a year and all do emphasise the "medium to long term" ...

[GeoffF100]

PNL did the best of this bunch:

https://www.trustnet.com/factsheets/T/i ... trust-plc/

The problem is the costs. If you compound them up over ten or twenty years, the hit is horrible. It does not make much sense. You can hold the underlying assets much more cheaply.

[Lootman]

PNL did the best of this bunch:

https://www.trustnet.com/factsheets/T/i ... trust-plc/

The problem is the costs. If you compound them up over ten or twenty years, the hit is horrible. It does not make much sense. You can hold the underlying assets much more cheaply.

You can say that ("hold the underlying assets") about a lot of funds e.g. Fundsmith. Although that might be harder in practice if they invest in securities that are more difficult for an individual UK small investor to trade (e.g. private holdings, property, derivatives etc.)

And what you also cannot do, at least on a timely basis, is switch between asset classes, sectors or individual holdings. Part of what you are paying for with something like PNL is their ability to identify turning points, where they switch from (say) bonds to equities, or from cash to gold.

Of course you may not believe that they can reliably do that. But then in that case you presumably would not buy PNL anyway.

[OhNoNotimAgain]

PNL did the best of this bunch:

https://www.trustnet.com/factsheets/T/i ... trust-plc/

The problem is the costs. If you compound them up over ten or twenty years, the hit is horrible. It does not make much sense. You can hold the underlying assets much more cheaply.

No, the problem is asset allocation. Investing in stuff with no income is not a problem when interest rates are zero.
Different story when rates are >5% and no sign they will come down much in our lifetime.

[GeoffF100]

You can say that ("hold the underlying assets") about a lot of funds e.g. Fundsmith. Although that might be harder in practice if they invest in securities that are more difficult for an individual UK small investor to trade (e.g. private holdings, property, derivatives etc.)

PNL holds conventional and index liked bonds, commodities, and about 25% equities. You could replicate that more cheaply with trackers. However, you are right in saying that you could not change that allocation outside a tax shelter without paying tax. As you said, it comes down to whether you think the fund manager has better than chance probability of profiting from trading, and whether you are willing to pay high fees for him to try. (The fund manager will profit personally, but that is not what I mean, of course.)

[Lootman]

You can say that ("hold the underlying assets") about a lot of funds e.g. Fundsmith. Although that might be harder in practice if they invest in securities that are more difficult for an individual UK small investor to trade (e.g. private holdings, property, derivatives etc.)

PNL holds conventional and index liked bonds, commodities, and about 25% equities. You could replicate that more cheaply with trackers. However, you are right in saying that you could not change that allocation outside a tax shelter without paying tax. As you said, it comes down to whether you think the fund manager has better than chance probability of profiting from trading, and whether you are willing to pay high fees for him to try. (The fund manager will profit personally, but that is not what I mean, of course.)

I do not know about now but I recall that in the past PNL has held S&P 500 futures as a surrogate for holding or shorting US shares. You could duplicate that yourself but, given the implied leverage in futures, it would take some thought and work. Ditto if they use options to hedge during periods of volatility.

Ruffer has made a lot of use of options, including far out-of-the-money index put options.

In both cases derivatives can alter the risk profile of a portfolio quite quickly and efficiently, in a way that you and I would find it hard to duplicate, even if we knew about the move.

But yes, is it worth paying 1% a year for a manager to switch around between asset classes? One thing for me is that I am more comfortable investing more in these things, and holding less cash, because I expect them to have a beta of less than one. And twice in market declines I have sold them off and switched into mainstream equities.

[JohnW]

This fellow argues that 99% of multi-asset funds just couldn’t cut the mustard over ten years. It can’t be easy.
https://www.pipsbenchmark.com/2023/05/d ... hmark.html

[baldchap]

They have done the job of preserving the wealth of the Managers wonderfully.

[scrumpyjack]

They have done the job of preserving the wealth of the Managers wonderfully.

Yes, for the managers it's Heads they win, Tails they don't lose (in fact probably still win!)

[vand]

Yes they are down, no it doesn't make them pointless. Anyone who really thinks that doesn't really understand investing.

Sure, stuffing your money in a mattress would have been better over the last 2 years. So what? If you want absolutely no risk then stick to AAA+ rated debt and hold onto it until maturity.

Personally I am willing to take more risk than that, even with my "defensive" options.

[77ss]

Hi All, the wealth preservers, CGT, RICA, PNL, etc have been on the slide now for 12 months. i.e. CGT 12 months -9.6%. PNL done OK over 12 months -1%.

I take it those are capital only values, not total return. Also, they do seem to have been caught in the general ITs-at-a-discount trend over the last year, as a year ago all were at premiums and now all are at discounts. From their respective AIC pages:

.                          CGT       PNL       RICA
1 Year Share Price TR     -8.0       0.1      -12.8
1 Year NAV TR             -2.4       2.3      - 7.1

Premium  4-Nov-2022        2.32      0.62       1.4
Discount 3-Nov-2023       -3.64     -0.68     - 4.21

Still not great of course, although it's just a year and all do emphasise the "medium to long term" ...

True - and one year may just be a blip, but 5 yr TR s (from HL) don't look too good either. The 3 'wealth preservers' average just over 22 - a shade ahead of CTY. As ever, it depends where one starts from. I would be interested in 4 year TR s - which takes us back to before COVID.

[vand]

I take it those are capital only values, not total return. Also, they do seem to have been caught in the general ITs-at-a-discount trend over the last year, as a year ago all were at premiums and now all are at discounts. From their respective AIC pages:

.                          CGT       PNL       RICA
1 Year Share Price TR     -8.0       0.1      -12.8
1 Year NAV TR             -2.4       2.3      - 7.1

Premium  4-Nov-2022        2.32      0.62       1.4
Discount 3-Nov-2023       -3.64     -0.68     - 4.21

Still not great of course, although it's just a year and all do emphasise the "medium to long term" ...

True - and one year may just be a blip, but 5 yr TR s (from HL) don't look too good either. The 3 'wealth preservers' average just over 22 - a shade ahead of CTY. As ever, it depends where one starts from. I would be interested in 4 year TR s - which takes us back to before COVID.

If you are considering them as "wealth preservers" then their *riskiness* should be just as important as their performance.

Therefore, these funds are much better evaluated by looking at how much risk they are exposing their holders to just as much as their performance - risk-adjusted metrics are much more meaningful here.

[kltrader]

Wealth preservers haven't been performing well lately. Building society savings at 5.5% sound more appealing, but it depends on your risk tolerance and goals. Diversification could be an option to consider.