Step-by-Step guide to investing: seminar 10

CURIOUS-AND-SNOOTY TRUSTS

We have looked at three solid UK income-and-growth trusts, now let's look at the curious-and-snooty sector. These trusts don't seek outside managers, they manage themselves. They are passionate about capital preservation and do not take undue risks. They are usually investing their own money as well as yours.

Personal Assets. Back in the early nineties Norman Lamont swore by Personal Assets. It is famous for being the only fund to have seen Black Monday coming and moved its assets to cash. In 2006 its star manager Ian Rushbrooke warned of the current credit crunch, saying that US Central banker Greenspan had fuelled worldwide a deadly debt mountain the enormity of which will only be revealed over the next three years.

The quarterly reports now written by Robin Angus are a delight to read. In last month's report Robin also blames our current woes on Greenspan and other central bankers:

To deny the inconvenient truth that the central bankers were responsible for the banking crisis is like saying that, while producing pâté de foie gras may be immoral, the moral fault rests with the geese for allowing themselves to be force fed.

And blaming the cupidity of many investors:

Remember those people who lost what the media always call ‘their life savings’ with Barlow Clowes? Tell them that water could go uphill, or that you had a perpetual motion machine, and they’d have laughed at you. Tell them you could invest in gilts, pay a hefty management fee and still get a yield higher than the gilts themselves, and they chorused, ‘Where do we sign?’

Personal Assets' excellent performance over a decade is laid out in the report. Interestingly, the trust keeps a large core holding in the Alliance Trust. Personal Assets has succeeded in keeping its share price close to its NAV. Not a bargain then, but a good buy.


RIT  R is for Rothschild, and if you buy into this trust you are buying the expertise that handles many of the Rothschild millions. Lord Rothschild is the chairman. If this trust goes bust you will find him in a cardboard box on the Embankment. It is a global investor. Like the other curious-and-snooty trusts it is ashamed to be on a discount, but can't entirely help it. A year ago it was on a premium of over 5% - you had to pay over the odds to get the Rothschild expertise! - but currently it is on a discount of around 4%.

Hansa Trust. A Moneybox Man favourite. Perhaps it's the website, with its lighthouse beaming out in search of profit. It's run by the Hanseatic Group, and possibly behind their smooth city façade they are all salty Baltic sailors. Is a "special situations" trust, investing wherever it feels it can make a few bob. It is very snooty indeed:

we co-invest with our clients, demonstrating our intention to share in the risk of loss with our clients and to be rewarded by the investment returns and not by fees alone

We invest, in effect, as principal which differs significantly from most asset management organisations for whom the establishment and building of fee based business is their primary rationale.

Our creative energies are focussed on the investment process. They are not dissipated into organisational needs, hierarchy, bureaucracy or office politics.


It has a very large holding - practically a third of its assets - in Ocean Wilsons, a Bermuda based company that amongst other things runs the ports and tug boat services of Brazil, and gives money each year to rescue homeless orphans from the streets of Rio de Janeiro. Ocean Wilsons had a terrible time last year, dropping in value by over 30%. This pulled the price of Hansa shares down, and caused a widening and embarrassing discount of nearly 12% and a dividend of 2.3%.

Moneybox Man holds Hansa, and suffered last year - but he isn't selling, and is inclined to buy some more. Hansa at a discount of 12%! Is the world coming to an end?