Capital Gearing Trust PLC GBP · LSE:CGT
Capital Gearing Trust PLC GBP — Capital Gearing Trust — Investor Presentation (October 2023)
31 slides from Capital Gearing Trust PLC GBP's investor presentation, October 2023
Slide 1: Capital Gearing Trust October 2023
CG Asset Management Capital Gearing Trust October 2023
Slide 2: Disclaimer
Disclaimer CG Asset Management Limited (“CGAM”) is authorised and regulated by the Financial Conduct Authority to carry on regulated activities in the United Kingdom. The information contained in this Document has been prepared by and is the sole copyright of CGAM. No representation is being made th
Slide 3: Capital Gearing Trust Overview
Capital Gearing Trust Overview
Slide 4: Capital Gearing Trust Overview
Overview Capital Gearing Trust Overview Investment Objective • The Company’s objective is to preserve, and over time to grow shareholders’ real wealth • The Company seeks cost-effective, long-term absolute returns via a global portfolio of equities, bonds and commodities • Simple low-cost approach,
Slide 5: CG Asset Management Overview
Overview CG Asset Management Overview 2001 Founded Founded in 2001 by Peter Spiller, former Chief Investment Officer and Chief Strategist of Cazenove £3.7bn AUM £3.9bn in assets under management 2 Strategies Manages two strategies, absolute return and real return, across five funds 11 Employees Team
Slide 6: CGAM in partnership with our clients
Overview CGAM in partnership with our clients What makes us different? What does that mean for our clients? 1. The client comes first The firm’s founding 2. Don’t be greedy principles 3. Have fun In turn these principles mean that: • We have and will close funds to protect investors • We continuousl
Slide 7: CGAM Team
Overview CGAM Team Investments & IR Operations Risk & Compliance Peter Spiller Alastair Laing Chris Clothier Chris Taylor Jason Barlow Richard Goody Co - Chief Investment CEO, Fund Manager Co - Chief Investment Chief Operations Senior Operations Senior Compliance Officer Officer Officer Manager Offi
Slide 8: Since 1982 the CGT share price total return has been 257x
Overview Since 1982 the CGT share price total return has been 257x1 NAV Total Return History (Rebased) Apr 1982 to Apr 2023 20,000 18,000 16,000 14,000 12,000 CGT 10,000 MSCI UK 8,000 6,000 4,000 2,000 0 1983 1995 2018 1982 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1996 1997 1998 1999 2
Slide 9: Investment Process
Investment Process Capital Gearing Trust
Slide 10: Principles
Investment Process Principles What are we trying to do? How do we do it? Portfolio Construction Keep It Simple ⇔ Asset Selection No derivatives, no gearing, Diversified portfolio no short selling, construction focusing on no reaching for yield negatively correlated assets Short Term: Low Cost Driven
Slide 11: 5 inputs drive our asset allocation, underpinned by a focus on duration
Investment Process 5 inputs drive our asset allocation, underpinned by a focus on duration Valuations All major asset classes Absolute / Relative / Relative to own history Investor Behaviour Core Macroeconomic Beliefs Degree of risk taking / speculative Guiding long-term asset allocation Asset behav
Slide 12: Dynamic asset allocation that responds to the business cycle
Investment Process Dynamic asset allocation that responds to the business cycle High Growth Expansion Inflationary Boom ✓ Equities Commodities & Gold ✓ Index Linked Equities ≈ Index Linked Bonds ≈ Low High Inflation Inflation Depression Financial Repression ✓ Nominal Bonds Index Linked Bonds ✓ ≈ I
Slide 13: 3 Core Asset Allocation Pillars
Investment Process 3 Core Asset Allocation Pillars Risk Assets Equities / Funds Property Infrastructure Alpha generation by exploiting discounts Efficient diversified equity exposure Dry Powder Index Linked Bonds Cash US TIPS Treasury Bills UK Linkers Short Dated Credit Other high quality sovereigns
Slide 14: Index-Linked bonds are a fundamental component of our asset allocation
Investment Process Index-Linked bonds are a fundamental component of our asset allocation Protection against financial repression Annual Returns % of a UK Stocks and TIPS – unhedged in GBP Only asset that we believe is likely to deliver protection (1998 – 2022) 40% Negative correlation with risk ass
Slide 15: Capital Gearing Trust
Capital Gearing Trust Positioning and Returns
Slide 16: Positioning is defensive, with a focus on inflation protection
Positioning and Returns Positioning is defensive, with a focus on inflation protection CGT Asset Allocation October 2023 Contribution by Asset Class LTM October 2023 100% Cash & Tbills CGT -2.7% 11% Dry Powder, 24% Credit 13% 80% Index Linked Bonds -1.6% 60% Index Linked Risk Assets -1.3% Index Link
Slide 17: Interest sensitive risk assets have faced headwinds in the last year
Positioning and Returns Interest sensitive risk assets have faced headwinds in the last year CGT Risk Assets – Geographic Exposure and Asset Exposure Contribution by Risk Assets LTM October 2023 100% CGT Risk Assets -1.3% 80% UK Conventional Equity Infrastructure -1.2% 60% Property -0.4% 40% Japan I
Slide 18: …however our largest equity positions have delivered strong performance
Positioning and Returns …however our largest equity positions have delivered strong performance MSCI Japan ESG Screened ETF Performance (USD) LTM MSCI Europe Energy ETF Performance (EUR) LTM 220 6.1 5.9 210 5.7 200 5.5 190 5.3 5.1 180 4.9 170 4.7 4.5 160 Oct 22 Dec 22 Feb 23 Apr 23 Jun 23 Aug 23 Oct
Slide 19: CGT has outperformed comparators on an absolute and risk adjusted basis
Positioning and Returns CGT has outperformed comparators on an absolute and risk adjusted basis CGT vs. Comparators: Total Returns to October 20231,2 70 60 50 40 30 20 10 0 Dec-18 Dec-22 Dec-15 Dec-16 Dec-17 Dec-19 Dec-20 Dec-21 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23 Capital Gearing
Slide 20: Both equity and bond portfolios have contributed to outperformance
Positioning and Returns Both equity and bond portfolios have contributed to outperformance CGT Risk Assets Returns Performance to October 20231 CGT Bonds Only Returns Performance to October 20231 160 50 140 40 120 30 100 80 20 60 10 40 0 20 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 -10 2015 201
Slide 21: Returns have come with low volatility and low correlation
Positioning and Returns Returns have come with low volatility, and low correlation to equity & bond markets, and excellent risk adjusted performance Sharpe Ratio & Volatility (%) vs. Major Indices 1.0 13.1% 12.6% 0.9 5.1% 0.8 Volatility 0.7 CGT MSCI UK MSCI World 0.6 25.2% 0.5 Equity Beta 15.5% 0.4
Slide 22: Duration, currency and liquidity are actively managed
Positioning and Returns Duration, currency and liquidity are actively managed Currency Exposure1 Time to Liquidation (days)2 100% Other 90% JPY 9% NOK 80% CHF USD 21% 70% SEK 60% EUR 4% CAD 50% AUD 40% JPY Duration and Yield3 Weight Duration (Yrs) Yield (%) Rating4 USD 30% Cash & Tbills 11% 0.1 3.7
Slide 23: A discount has developed in CGT, so the company is buying back shares
Positioning and Returns A discount has developed in CGT, so the company is buying back shares consistent with the discount control mechanism CGT – Share Price, NAV and Discount Control to October 2023 5,350 8% 5,150 6% 4,950 4% Premium / (Discount) % 4,750 2% NAV / Price 4,550 0% 4,350 -2% 4,150 -4%
Slide 24: Top Equity and Bond Holdings
Positioning and Returns Top Equity and Bond Holdings Top 10 Equity Holdings Top 10 Bond Holdings Asset Weight Asset Weight ISHARES MSCI JAPAN ESG SCREENED 3.5% UK I/L 0.125% 22/03/24 8.4% SPDR MSCI EUROPE ENERGY UCITS ETF 2.7% UK I/L 0.125% 22/03/29 7.5% LYXOR STOXX 600 BASIC RESOURSES 1.5% UK I/L 0
Slide 25: Changes to asset allocation tend to be modest over the short term
Positioning and Returns Changes to asset allocation tend to be modest over the short term but can be fundamental over the long term CGT Asset Allocation – 2011 to 2023 100% 80% 60% 40% 20% 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Cash Gold Index Linked Govt. Bonds Conventi
Slide 26: Current Focus Areas
Positioning and Returns Current Focus Areas Real Interest Rates Japanese Equities Credit Infrastructure Developed market issuers The Yen is offering After an attractive Defensively positioned offering risk free inflation exceptional value, making opportunity to add in infrastructure assets with beat
Slide 27: Approach to Responsible Investing
Capital Gearing Trust Approach to Responsible Investing
Slide 28: The principles underpinning our approach to responsible investment
Responsible Investing The principles underpinning our approach to responsible investment Be honest One firm, one rule Ethics, not mathematics Don’t disinvest, engage No greenwashing, no PR-led Our standards apply to all the There is no formula that can be When investors have the initiatives, no jarg
Slide 29: ESG integration by asset class
Responsible Investing ESG integration by asset class 1. Direct Government Securities 2. Direct Corporate Credit and Preference Shares A majority of the assets held by the funds are invested in direct holdings of The funds hold small quantities of direct credit and preference share holdings securitie
Slide 30: ESG integration by asset class
Responsible Investing ESG integration by asset class 3. Listed Closed-Ended Funds, Investment Trust, REITs and Activist Engagement Technique Frequency of Employment Property Companies Management Engagement Continuous CGAM has a long history of active engagement in the London market for listed Board
Slide 31: www.cgasset.com
IR@cgasset.com +44 20 3906 1637 20 King Street, London, EC2V 8EG www.cgasset.com
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