Capital Gearing Trust PLC GBP · LSE:CGT

Capital Gearing Trust PLC GBP — Capital Gearing Trust — Q2 2022 Earnings Presentation

29 slides from Capital Gearing Trust PLC GBP's earnings presentation, Jul 7, 2022

  1. Slide 1: Focused Wealth Preservation: CGAM Multi-asset Update Q2 2022 Webinar

    Focused Wealth Preservation CGAM Multi-asset Update Q2 2022 Webinar

  2. Slide 2: Disclaimer

    CGAM Webinar Q2 2022 2 Disclaimer This presentation is issued and intended for professional investors and eligible market counterparties only. Performance figures have been calculated by CG Asset Management Ltd based on information provided by Bloomberg, Morningstar and Northern Trust International

  3. Slide 3: Contents

    CGAM Webinar Q2 2022 3 CONTENTS 1. Background to CG Asset Management 2. Returns and Positioning 3. Outlook 4. What excites us? © Copyright CGAM 2022

  4. Slide 4: Background to CG Asset Management

    CGAM Webinar Q2 2022 4 Background to CG Asset Management A focussed boutique © Copyright CGAM 2022

  5. Slide 5: Founded in 2001, CGAM manages ~£3.9bn in 5 funds

    CGAM Webinar Q2 2022 5 CGAM BACKGROUND Founded in 2001, CGAM manages ~ £3.9 bn in 5 funds, split between absolute return and real return mandates pm Fund Launched Size Structure Fees (AMC) Capital Gearing Trust 19821) £1,160 m Investment Trust 2) 0.43%3) Absolute returns through Absolute long only i

  6. Slide 6: Since 1982 CGT has returned 280x with only one down year

    CGAM Webinar Q2 2022 6 CGAM BACKGROUND Since 1982 CGT has returned 280x1) with only one down year 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 CGT TR 45% 49% 29% 35% 47% 3% 30% 2% 19% 18% 30% 18% 5% 20% 13% 17

  7. Slide 7: Team

    CGAM Webinar Q2 2022 7 CGAM BACKGROUND Team 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 Analyst Jason Barlow, Risk & Operations Investment Analyst Manager Investments O

  8. Slide 8: Multi-Asset Funds Performance

    CGAM Webinar Q2 2022 8 Multi-Asset Funds Performance © Copyright CGAM 2022

  9. Slide 9: Positioning remains defensive with a focus on inflation protection

    CGAM Webinar Q2 2022 9 POSITIONING & RETURNS 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 Linked 60% Index Linked Bonds Index L

  10. Slide 10: Equity and bond portfolios have outperformed their benchmarks

    CGAM Webinar Q2 2022 10 POSITIONING & RETURNS Both the equity and bond portfolios have outperformed their benchmarks and contributed to the stability of returns CGT Risk Assets* Returns Recent Performance To June 2022 (%) CGT Bonds Only* Returns Recent Performance To June 2022 (%) 45 155 135 35 115

  11. Slide 11: This year has proved a good test of defensive characteristics

    CGAM Webinar Q2 2022 11 POSITIONING & RETURNS 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 = GBP Aggregate, Risk Assets Benchmark

  12. Slide 12: Power & Energy allocation delivered equity outperformance

    CGAM Webinar Q2 2022 12 POSITIONING & RETURNS 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 Conventional 80% Equity UK Power & Energy Eq

  13. Slide 13: CGT has delivered good risk adjusted returns relative to peers

    CGAM Webinar Q2 2022 13 POSITIONING & RETURNS Over the last 5 years CGT has delivered good risk adjusted returns relative to its peers CGT vs. Peers – Total Returns to June 2022 (%) CGT vs. Peers – Max Monthly Drawdown 40 40% 35 35% Capital Gearing Trust 30 30% Troy Trojan Total 5 Year Returns 25 25

  14. Slide 14: Outlook

    CGAM Webinar Q2 2022 14 Outlook Some reflections on what the future may hold © Copyright CGAM 2022

  15. Slide 15: Equity sell-off hasn't changed their fundamental attraction; we favour TIPS

    CGAM Webinar Q2 2022 15 OUTLOOK The sell-off in equities hasn’t (yet) changed their fundamental (lack of) attraction. We continue to favour TIPS S&P 10 Year Real Return Model – 1982 to 20221 10 Year US Real Yields – 1982 to 2022 20% 6% 5% 15% 4% 10% 3% 2% 5% 1% 0% 1982 1984 1986 1988 1990 1992 1994

  16. Slide 16: The global economy is slowing quite rapidly

    CGAM Webinar Q2 2022 16 OUTLOOK The global economy is slowing quite rapidly… Dr Copper! US ISM Manufacturing Index - New Orders 11,000 65 10,000 60 9,000 55 8,000 7,000 50 6,000 45 5,000 4,000 40 Jul 12 Jul 13 Jul 14 Jul 15 Jul 16 Jul 17 Jul 18 Jul 19 Jul 20 Jul 21 Jul 12 Jul 13 Jul 14 Jul 15 Jul 16

  17. Slide 17: Recession concerns in the bond market

    CGAM Webinar Q2 2022 17 OUTLOOK …which is feeding into recession concerns in the bond market (though equity earnings estimates appear to be blissfully unaware of this!) US 2Y/10Y spread (bps) US 5Y5Y Breakeven (%) 140 2.65 2.55 120 2.45 100 2.35 80 2.25 60 2.15 40 2.05 1.95 20 1.85 0 Jul 21 Sep 21 N

  18. Slide 18: Wages are strong and likely to remain strong

    CGAM Webinar Q2 2022 18 OUTLOOK And yet, wages are strong and likely to remain strong… Atlanta Fed Wage Tracker vs. U3 Unemployment (9 months lagged) 7.0 6.0 Atlant Fed Wage Tracker (%) 5.0 4.0 Pre-GFC Post-GFC 3.0 Post-Covid 2.0 1.0 0.0 3.0 5.0 7.0 9.0 11.0 13.0 15.0 U3 Unemployment (%) © Copyright

  19. Slide 19: The Beveridge Curve and unsuitable job openings

    CGAM Webinar Q2 2022 19 OUTLOOK …especially if the newly unemployed aren’t suitable for the job openings that exist The Beveridge Curve 8 7 6 Vacancy Rate (%) 5 Pre-GFC Post-GFC 4 Post-Covid 3 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Unemployment Rate (%) © Copyright CGAM 2022 Source: Bloomberg

  20. Slide 20: Rising rents and house prices likely to lift shelter CPI

    Multi Asset Update - LGT Vestra 20 OUTLOOK Rising rents and house prices are likely to cause shelter CPI to rise… though ultimately this will temper as the housing market slows CPI Shelter (lagged by 20 months) vs. House Price Growth – YoY (%) US Zillow Rent Index – YoY (%) 25% 7.0% 20% 18% 20% 6.0%

  21. Slide 21: Why the bond market and the Fed are at odds

    CGAM Webinar Q2 2022 21 OUTLOOK Perhaps these contradictions explain why the bond market and the Fed are at odds with each other Historical Market Implied OIS Rate (%) US Federal Fund Rate FOMC Median vs. Implied Market Forecasts (%) 4.0 4.00 3.4 3.8 3.5 3.3 3.80 2.8 3.60 2.9 3.0 3.4 3.4 3.40 2.3 2.

  22. Slide 22: What excites us?

    CGAM Webinar Q2 2022 22 What excites us? Where we are deploying your capital © Copyright CGAM 2022

  23. Slide 23: Lengthening duration in TIPS to 10 years

    CGAM Webinar Q2 2022 23 WHAT EXCITES US? Higher real yields and tighter financial conditions have enticed us to lengthen duration in TIPS to 10 years (yet more pain to come?) Chicago Fed Financial Conditions Index “Policy works through financial conditions. That’s how 0.20 it reaches the real econom

  24. Slide 24: Renewables in Europe and the UK look great value

    CGAM Webinar Q2 2022 24 WHAT EXCITES US? We continue to think that renewables in Europe and the UK look great value, especially against the backdrop of recent moves in power prices European 1Y Forward Baseload Power Price (EUR/Mwh) 400 350 300 250 200 150 100 50 0 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20

  25. Slide 25: The Japanese Yen is fantastically cheap

    CGAM Webinar Q2 2022 25 WHAT EXCITES US? The Japanese Yen is fantastically cheap, and its virtues may become more obvious if inflation is more persistent elsewhere USD/JPY Exchange rate 140 130 120 110 100 90 80 70 Jul 12 Jul 13 Jul 14 Jul 15 Jul 16 Jul 17 Jul 18 Jul 19 Jul 20 Jul 21 Jul 22 © Copyri

  26. Slide 26: Credit spreads are blowing out, even in high quality names

    CGAM Webinar Q2 2022 26 WHAT EXCITES US? Credit spreads are blowing out, even in high quality names Grainger 3.375% April 2028 Spread 400 350 300 Spread (bps) 250 200 150 100 Apr 18 Oct 18 Apr 19 Oct 19 Apr 20 Oct 20 Apr 21 Oct 21 Apr 22 Jul 18 Jan 19 Jul 19 Jan 20 Jul 20 Jan 21 Jul 21 Jan 22 © Copy

  27. Slide 27: Contact us

    Contact us Chris Clothier +44 (0) 203 906 1632 cclothier@cgasset.com CG Asset Management 20 King Street | London EC2V 8EG info@cgasset.com www.cgasset.com © Copyright CGAM 2022

  28. Slide 28: CGAM Webinar Q2 2022

    CGAM Webinar Q2 2022 28 © Copyright CGAM 2022

  29. Slide 29: We struggle to allocate materially to Gold given its volatility and premium

    CGAM Webinar Q2 2022 29 WHAT EXCITES US? We struggle to allocate materially to Gold given its volatility and premium Real gold price – 1950 to 2022 900 $820 800 $680 700 600 500 400 300 $150 200 $100 100 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 © Copyright CGAM 20

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