Capital Gearing Trust PLC GBP · LSE:CGT

Capital Gearing Trust PLC GBP — Capital Gearing Trust — Shareholder Meeting (July 2022)

28 slides from Capital Gearing Trust PLC GBP's shareholder meeting presentation, Jul 12, 2022

  1. Slide 1: A Good Start

    A Good Start Reflections on the first forty years of running Capital Gearing Trust Capital Gearing Trust – AGM 12 July 2022

  2. Slide 2: Agenda

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 2 Agenda 1. Returns and Approach 2. Lessons Learned 3. The Trust Today 4. The Next 40 Years? © Copyright CGAM 2022

  3. Slide 3: Returns and Approach

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 3 Returns and Approach 1 © Copyright CGAM 2022

  4. Slide 4: A good start

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 4 RETURNS AND APPROACH A good start NAV Total Return History (Rebased) Apr 1982 to Apr 2022 20,000 18,000 16,000 14,000 12,000 CGT 10,000 MSCI UK 8,000 6,000 4,000 2,000 0 1993 2008 2019 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1

  5. Slide 5: The story by decades

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 5 RETURNS AND APPROACH The story by decades 80’s - The Go Go Years 90’s - The Bubble Inflates 00’s - The Bubble Bursts 10’s - The Bubble Inflates Again 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1

  6. Slide 6: Delivering equity returns without the equity risk

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 6 RETURNS AND APPROACH Delivering equity returns without the equity risk Asset Allocation 1982 to 2022 Equity Beta 1990 to 2022 100% Cash 1.0 90% 0.9 80% 0.8 Gold 70% 0.7 60% 0.6 Gov't Bonds 50% 0.5 40% 0.4 Credit / 30% Preference 0.3 Sha

  7. Slide 7: Investor letter quote: holding our coats

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 7 “We have relied on you to hold our coats whilst we fish in riskier waters, safe in the knowledge that we can get our coats back when markets get chilly” EXCERPT FROM A LETTER SENT TO US BY A CAPITAL GEARING TRUST INVESTOR © Copyright CG

  8. Slide 8: Lessons Learned

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 8 Lessons Learned 2 © Copyright CGAM 2022

  9. Slide 9: Quote on ESG and governance

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 9 “ESG is the dominant topic amongst investors currently. With environmental and social aspects particularly widely discussed. Governance has received less emphasis; yet it is vital for the long- term interests of investors and for wider

  10. Slide 10: Governance matters – a close shave

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 10 LESSONS LEARNED Governance matters – a close shave CGT’s story might have been a shorter one had The view from Fleet Street directors not rebuffed a hostile approach In one of the more bizarre episodes in its history, conduct of Tom Wi

  11. Slide 11: Discounts matter

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 11 LESSONS LEARNED Discounts matter – they are a source of risk, a cause of poor liquidity and in most cases need not exist at all Boards today have much greater power than they “Now that is what I call a premium!” - CGT think to solve bo

  12. Slide 12: Quotes on derivatives

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 12 “The use of a growing array of derivatives … are key factors underpinning the greater resilience of our largest financial institutions” ALAN GREENSPAN, MAY 2005 “The huge size of the derivative market, in particular the rapidly growing

  13. Slide 13: Leverage matters – the best time to gear

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 13 LESSONS LEARNED Leverage matters – the best time to gear is when credit is scarce, not when it is plentiful Capital Gearing Trust, as the name suggests, Capital Gearing Trust – Mortgage Document made use of debt when interest rates wer

  14. Slide 14: The Trust Today

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 14 The Trust Today 3 © Copyright CGAM 2022

  15. Slide 15: A simple aim - to preserve and grow real wealth

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 15 CGAR – TRACK RECORD A simple aim - to preserve, and over time to grow shareholder’s real wealth Capital Gearing Trust - NAV Total Return History 700 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

  16. Slide 16: Positioning remains defensive with a focus on inflation protection

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 16 THE TRUST TODAY Positioning remains defensive with a focus on inflation protection CGT Asset Allocation June 2022 (%) Returns by Asset Class over last twelve months (%) 100% Cash & Tbills Dry Powder CGT 2.9 Credit 80% Gold 17.4 Index L

  17. Slide 17: Equity and bond portfolios outperformed their benchmarks

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 17 THE TRUST TODAY Both the equity and bond portfolios outperformed their benchmarks contributing to the stability of returns CGT Risk Assets* Performance to June 2022 (%) CGT Bonds Only* Performance to June 2022 (%) 45 155 135 35 115 95

  18. Slide 18: A good test of the portfolio's defensive characteristics

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 18 THE TRUST TODAY This year has proved to be a good test to demonstrate the defensive characteristics of the portfolio CGT YTD June 2022 Performance vs. Benchmarks* Risk Assets Bonds 0.8 -6.7 -12.8 -18.7 Benchmark CGT *Bond benchmark = G

  19. Slide 19: Power & Energy allocation delivered equity outperformance

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 19 THE TRUST TODAY A substantial allocation to Power & Energy delivered equity outperformance in the period Risk Assets – Geographic Exposure and Asset Exposure YTD June 2022 Risk Asset Performance (%) 100% CGAR Risk Assets -6.7 Conventio

  20. Slide 20: What areas are we currently focused on?

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 20 OUTLOOK What areas are we currently focused on? Real Interest Rates • Real rates have turned positive in the US and look attractive in both relative and absolute terms Japanese Yen • Extraordinary value, particularly should inflationar

  21. Slide 21: The Next 40 Years?

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 21 The Next 40 Years? 4 © Copyright CGAM 2022

  22. Slide 22: My advice to any fund manager is to start in 1982

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 22 THE NEXT 40 YEARS? “My advice to any fund manager is to start their career in 1982” 1 S&P 10 Year Real Return Model – 1982 to 2022 10 Year US Real Yields – 1982 to 2022 20% 6% 5% 15% 4% 10% 3% 2% 5% 1% 0% 2002 1982 1984 1986 1988 1990

  23. Slide 23: The road to hell is paved with IOUs

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 23 THE NEXT 40 YEARS? The road to hell is paved with IOUs US Non-Financial Debt to GDP Total = 296% 300 250 85% 200 Debt to GDP (%) 80% 150 100 132% 50 0 1958 1964 2007 2013 1947 1949 1950 1952 1953 1955 1956 1959 1961 1962 1965 1967 1968

  24. Slide 24: Historical impact of inflation on asset prices

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 24 THE NEXT 40 YEARS? We are acutely aware of the historical impact of inflation on asset prices - including those that are deemed to be real Real Return vs. Inflation 1900-2011 Gold 26% “For a variety of reasons reviewed here, inflation

  25. Slide 25: Quotes on inflation and monetary finance

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 25 “This change reflects our view that a robust job market can be sustained without causing an outbreak of inflation” JEROME POWELL / JACKSON HOLE, AUGUST 2020 “Monetary finance will not be deemed an issue so long as inflation does not ri

  26. Slide 26: Monetary policy remains at emergency levels

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 26 THE NEXT 40 YEARS? The US economy is close to full employment, inflation is high and yet monetary policy remains at emergency levels Taylor Rule vs. Fed Funds – Last 30 years 15% 10% 5% Spread: FED - Taylor 0% FED Rate Taylor Rule Esti

  27. Slide 27: Providing security in my old age!

    Capital Gearing Trust – Annual General Meeting - 12 July 2022 27 THE NEXT 40 YEARS? Providing security in my old age! Peter Spiller, CIO Alastair Laing, Co-Manager Chris Taylor, COO Richard Goody, Risk & Compliance Director . Chris Clothier, Co-Manager Hassan Raza,CFA Lydia Groves, Operations Analys

  28. Slide 28: Contact us

    Contact us Chris Clothier +(44) 203 906 1632 cclothier@cgasset.com CG Asset Management 20 King Street London EC2V 8EG info@cgasset.com www.cgasset.com © Copyright CGAM 2022

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