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Personal Assets Trust bunkers down to protect and defend


Personal Assets Trust [LON:PNL] is all about protection. Managed by Troy Asset Management – and after all, the mythological Trojans were well known for being defensive and standing strong – the fund aims to protect and increase (in that order) the value of shareholders’ funds per share over the long term.

Defensive is the byword for Personal Assets Trust with investment manager, and founder and chief investment officer of Troy Asset Management, Sebastian Lyon, saying: “Central to Personal Assets Trust’s ethos is the protection of investors’ capital. Our approach is conservative, with attention paid first and foremost, to the downside risk of any investment. Our definition of ‘risk’ is fundamentally different from that commonly used by other global investment trusts and the industry at large, ours being ‘risk of losing money’, rather than ‘volatility of returns relative to an index’.”

Lyon, who set-up Troy in 2000 is assisted in managing the fund by Charlotte Yonge, who joined Troy in 2013 having started her career at Ruffer Investment Management.


The fund takes a multi-asset approach and has the mandate to invest globally. Personal Assets Trust invests in equities and fixed income securities and may also hold cash and cash equivalents including gold. The fund may use derivatives as a way of increasing or reducing its investment exposure and to enhance and protect investment positions and may also from time-to-time make use of currency hedging.

The last year showed that sometimes it pays to be defensive – although Warren Buffett famously said: “…be fearful when others are greedy, and greedy when others are fearful,” the chaos in both the bond and the equity markets following the eruption of War in Ukraine, inflation across the world precipitating a global cost-of-living crisis, and in the UK, the disastrous Liz Truss mini-budget in September, meant that all bets were off and it became a spiralling race to the bottom in all asset classes.

This was like feeding clover to pigs for a defensively-minded asset manager like Troy and management filled their boots in the downturn with US Treasury Inflated Protected Securities (US TIPS), UK gilts and large-cap equities whilst prices were depressed.

Lyons was quite cheery in all this gloom – justifiably as this market phase is where a fund like the Personal Assets Trust can shine. He said in a letter to shareholders last month: “March was the month that saw the world creak under the strain of higher rates. We witnessed the largest banking failure since the financial crisis, in the form of Silicon Valley Bank (SVB) in the US, and the swift demise of Credit Suisse in Europe […] These were not the first rumblings of trouble. The UK’s LDI chaos last September was a hint of what happens when you have the fastest rate hiking cycle in decades. After the events of last month, banks are likely to tighten lending standards further. This will make life a lot harder for sectors of the economy reliant on bank lending.”

Defensive bias

The portfolio is the most defensive it has been for some time. At the end of March the fund had 35% of its assets under management invested in US TIPS; a mere 22% invested in equities, 15% in short-dated US Treasury Bills; 14% in short-dated UK gilts and 11% in gold.

Of the equities, Personal Asset Trust has (as it always does) prioritised large-cap, international companies, including Unilever [LON:ULVR], Nestlé [SWX:NESN] and Microsoft [NASDAQ:MSFT], big companies with established brands and a diverse global customer base, that aren’t going anywhere. It also hold nearly 10% of assets under management in physical gold bars, and also has a position in Franco-Nevada [NYSE:FNV], the gold-streaming/royalty business.

As we said above protection is the priority for Personal Assets Trust, so this isn’t a fund for everyone, especially investors looking for index=beating capital growth. But since the end of the last financial crisis in March 2009 and Troy’s appointment as investment manager, the fund has grown 176.2% and currently has assets under management of GBP1.9bn. The fund was originally founded in July 1983 and is a closed-ended investment fund with 391.57 million shares in issue.

The fund uses the FTSE All-Share Index as a comparator, and underperformed 2018-19, 2020-21, 2021-22, but outperformed the All-Share during the Coronavirus period 2019-20 and also in 2017-18. However, it also compares itself to the UK Retail Price Index (RPI), which it has consistently outperformed.

As at the end of March 2023, the fund’s top five holdings were:

Gold Bullion 22% Commodities/Precious Metals
Unilever [LON:ULVR] 3.5% Consumer Goods
Nestlé [SWX:NESN] 5.6% Food processing
Visa [NYSE:V] 2.8% Financial Services
Diageo [LON:DGE] 2.4% Beverages

Lyons said: “Year-to-date stock market performance does not reflect the level of risk western economies are facing. We expect that once the blanket of a stronger consumer (thanks to post-Covid recovery tailwinds) is lifted, the issues will become more apparent. We believe weaker earnings will drive markets lower. We are positioned accordingly.”

The fund’s shares opened at 479p this morning (25th April) and has offered a 0.4% year-to-date return and a 3.5% one-year return, with its shares ranging between 463.9p and 506p.

Personal Assets Trust is a safe harbour in difficult climes, and is most-suitable for a cautious investor looking to preserve their capital over the long-term.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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