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Telegraph
01-05-2025
- Business
- Telegraph
The ultra-wealthy invest through family offices. Here's how to join them
Questor is The Telegraph's stockpicking column, helping you decode the markets and offering insights on where to invest for the past six decades. The concept of a family office can be traced back to Roman times, but the more modern versions originated in the 19th century with the likes of the Rockefellers, the Morgans and the DuPonts. Managing wealth over multiple generations requires an experienced team, a disciplined investment process, a long-term perspective and a capital preservation mindset. Luckily, this is readily available in the UK's investment trust industry – and you don't have to be a Rockefeller to benefit. Caledonia Investments (CLDN) and RIT Capital Partners (RCP) share similar DNA, employing investment approaches designed to both preserve capital as well as generate real returns over medium to long term. The ideal outcome for any investor is to participate in the positive returns of up markets but avoid the worst losses of down markets. Each of these trusts has demonstrated an ability to deliver attractive total returns – the five-year annualised net asset value (Nav) total returns of 13.6pc and 9.3pc for CLDN and RCP, respectively, have comfortably outperformed inflation and compare favourably with the 11pc annualised total return from the FTSE All Share index over the same period. Importantly, these returns have also been achieved with significantly lower volatility than broader equity benchmark indices. Examining the long-term performance of these trusts reveals their 'secret sauce'. Over the past decade, this column's analysis of monthly returns compared to the FTSE All Share index shows that these multi-asset, risk-aware strategies have captured between 50pc to 60pc of the index's positive returns while only experiencing 10pc to 30pc of the negative returns during down markets. This ability to navigate up and down markets is crucial, as it not only helps to protect capital, but also allows for market participation. CLDN has achieved this through a focus on exposure to high-quality companies in its global portfolio, and the blend of public and private equity. RCP also benefits from allocations to both public and private equity, but also employs 'uncorrelated strategies', including credit, government bonds and real assets as important diversified. Both investment strategies are naturally risk-averse, with management teams carefully monitoring the interaction between the different components in their portfolios and actively allocating capital to optimise risk and return. CLDN is a self-managed investment company overseen by Mat Masters (chief executive) and Rob Memmott (chief financial officer), and benefits from specialist teams focused on each of the portfolio's key asset classes of public companies, private capital and private equity funds, which each enjoy roughly equal allocation. The trust has a successful track record of delivering value from its private capital portfolio, generating a 12pc annualised total return over the past decade and realising £1.1bn in proceeds since 2012, with notable investments in 7IM, Park Holidays and BioAgilytix – and there is plenty left in the portfolio to excite: Stonehage Fleming, the largest independent multi-family office in EMEA; AIR-serv, a leader in air, vacuum and jet wash machines; Cobepa, a Belgium-based independent investment company; Butcombe Group, an inns and drinks business; and DTM the leading provider of outsourced tyre management services. RCP is also a self-managed investment company, overseen by Maggie Fanari (chief executive) and Nick Khuu (chief information officer), both of whom are experienced multi-asset investors. RCP has a larger exposure to public companies, comprising 44pc of its portfolio, and a similar weighting in private investments (33pc), but also has a quarter of its capital in uncorrelated strategies. The public equity portfolio includes exposure to opportunities in China and Japan, biotech firms, and a range of small and mid-cap companies. RCP has also been successful in generating value from its private investments. Notable recent portfolio events include the disposal of Xapo Bank, the listing of Webull and the takeover of Wiz by Alphabet. We see potential for this part of the portfolio to be an important growth driver, particularly in holdings Motive (leading software for the logistics industry), Kraken (cryptocurrency exchange) and Epic (category-leading US electronic health records business). Both trusts not only boast strong risk-adjusted returns, deep expertise and well-balanced portfolios, but also offer dividends. CLDN has increased its dividend for 57 consecutive years and currently yields 1.9pc, while RCP yields 2.1pc and plans to raise its 2025 dividend by 10.3pc. Wider than average discounts offer an attractive entry point for these strategies, in this column's view. Ten years ago, CLDN and RCP were trading on 16pc discount and 1pc premium, respectively, but since 2022, these discounts have widened dramatically – CLDN currently trades on a 32pc discount, while RCP is at a 27pc discount. In keeping with the wider trend across investment trusts, both CLDN and RCP have been actively buying back their own shares. In our view, these discounts are out of touch with the reality of the performance generated by these two portfolios, the future value drivers and the quality and experience of the teams. We believe this is a great opportunity to appoint your own family offices and benefit from a truly long-term perspective at a very reasonable price point. RIT Capital Partners Questor says: buy Ticker: RCP Share price: TBC
Daily Mail
24-04-2025
- Business
- Daily Mail
How to take advantage when stock markets are down: Financial planning moves that pay off
Stock markets have taken a tumble off the back of Trump's flip-flopping tariff announcements. While global markets have regained some ground, uncertainty remains. This was highlighted when Trump knocked US stocks again by calling Federal Reserve Chair Jerome Powell a 'major loser' for not lowering US interest rates. Investors, understandably, might be feeling a little sorry for themselves and their holdings, while pension savers too may have seen thousands wiped off their pots. The world's leading stockmarket, the S&P 500, is down 8 per cent this year, while the FTSE All Share is flat for 2025 but down 5 per cent on its early March peak. But such a market downturn also provides opportunities to make the most of a bad situation. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: 'Market downturns are times for steely resolve, and sticking with your long-term plan, but this doesn't mean you should do nothing at all. 'There are opportunities in down markets to make a few changes that can not only improve your investment prospects, but could help you save tax too.' Lump sum boosts With stock valuations dipping in recent weeks, sharp investors might want to take advantage of lower prices currently on offer. Stock market indices have recovered some ground but there are still many individual stocks, funds and investment trusts trading well below previous levels. The new tax year having just kicked off, so investors also now have the opportunity to make the most of their refreshed Isa and Sipp allowances. Renewed Isa allowances mean that Isa holders can invest £20,000 in stocks and shares via their Isa and up to £60,000 via a self-invested personal pension. Investing a lump sum at the start of the tax year can also offer better returns over time compared with investing a lump sum at the end of the year. Coles said: 'There are plenty of investors who view market falls as a buying opportunity. It's one reason why Hargreaves Lansdown had a record day of trading in the midst of the tariff trauma on 7 April, and most of those trades were people buying into investments.' Meanwhile, Lifetime Isa users can make the most of the 25 per cent top up offered by the government, while pension holders will also get rax relief. Coles said: 'Both will give you more bang for your buck, putting more money into the markets on day one. It means you can buy more investment units at a lower price and benefit more from market gains.' Protect your investments When investing, an Isa or pension wrapper offers protection from tax charges that you could face if your returns go beyond the annual dividend tax or capital gains tax allowances. With the new tax year's allowances in play, it can be a good time to shift any investments held outside of these wrappers into your shielded accounts. This transfer can be done using the Bed and Isa process which sees your assets sold outside of the wrapper and repurchased within, making them protected from any future tax liability. Coles added: 'You need to pay attention to the gains your investments have made. Ideally you want to move assets that have made gains below the annual allowance of £3,000.' Recent falls in markets means that any gains made are likely to be lower so you can move larger chunks of your portfolio without facing a tax bill. Time to rebalance Over time, investments perform differently, with some doing better than others. This can mean that what was once a diversified portfolio into an unbalanced one. Diversified investments are important to protect your funds from a poor performance from any one investment or geography. Significant market downturns can highlight if it is time to rebalance your portfolio. Coles said: 'They may have exposed how your investments have become unbalanced over time, and provided a timely reminder that some housekeeping is in order. 'Over time, some investments will do better, so they'll come to make up more of your portfolio that you might have initially planned. It will usually make sense to sell some of those that have done better, and rebalance your portfolio.' Carry your losses forward If you do hold investments outside of a tax wrapper, market losses can sometimes be beneficial for capital gains tax purposes. Coles said: 'It's never ideal to sell at a loss, but there are times when it can make sense for your overall investment strategy. ' If you are selling at a loss, you can offset the losses against any gains you have made in the same tax year, which could push you below the annual capital gains tax allowance. Coles added: 'Alternatively, make sure you report them to HMRC on your tax return, and they'll be offset against gains in future years.' Get your financial planning question answered Financial planning can help you grow your wealth and ensure your finances are as tax efficient as possible. A key driver for many people is investing for or in retirement, tax planning and inheritance. If you have a financial planning or advice question, our experts can help answer it. Email: financialplanning@ Please include as many details as possible in your question in order for us to respond in-depth. We will do our best to reply to your message in a forthcoming column, but we won't be able to answer everyone or correspond privately with readers. Nothing in the replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
Telegraph
20-03-2025
- Business
- Telegraph
Stop missing out on the home advantage – this trust is primed for recovery
Questor is The Telegraph's stockpicking column, helping you decode the markets and offering insights on where to invest for the past six decades. The UK market remains firmly out of favour. Open-ended UK equity funds haemorrhaged £22.7bn in net outflows last year as retail investors pulled their cash. It is not hard to find reasons for this – the FTSE All Share has risen 82pc over the past 10 years, while the MSCI World index has delivered more than double that at 168pc, driven largely by stellar returns in the US. In addition, it is easy to dismiss the UK market for lacking the growth potential found in the US, given just 1.3pc of its value is represented by technology stocks. Questor recognises that GDP growth in the UK remains anaemic, while business confidence is suffering from rising taxes and the uncertain geopolitical environment. However, UK equity valuations have already priced in a lot of bad news, and it is worth recognising that more than 75pc of revenues of UK-listed companies come from overseas. The key catalysts for a recovery come in the shape of the wave of takeover approaches by overseas corporates and private equity, as well as the ongoing return of capital via share buybacks. These are already having an impact – the FTSE All Share is up 11.1pc over the past 12 months, beating the global market's 8.2pc. Questor believes a value investment approach is well placed to benefit in the current environment, and Fidelity Special Values investment trust – which recently passed its 30 th anniversary – offers precisely that. Over its lifetime the contrarian investment vehicle, focused on UK equities, has grown assets from less than £50m to more than £1.1bn. For the first 18 years of the fund's life, the portfolio was run by Anthony Bolton, one of the leading fund managers of his generation. He was never going to be an easy act to follow, but Alex Wright has continued to deliver strong performance since taking over as lead manager in September 2012, with annualised Nav total returns of 11.4pc versus 7.5pc for the FTSE All Share, outperforming in 8 of 12 financial years. The manager seeks out unloved companies trading at attractive valuations that are entering a period of positive change – ones the market hasn't cottoned on to yet. Utilising the resources of Fidelity's extensive research team, the investment universe includes large, mid and small-cap stocks, as well as up to 20pc in companies listed outside the UK. Risk is managed partly through diversification, typically holding 80-120 investments, with the largest representing less than 5pc of assets, a title currently held by Imperial Brands, at 4.5pc. In addition, stock selection focuses heavily on the potential downside risk. In part, this is achieved by buying companies that are valued cheaply relative to their history or peers, but also by avoiding businesses that are highly leveraged in order to limit the threat of permanent loss of capital. Furthermore, a strict sell discipline is imposed once a company's share price has recovered. Just 39pc of the current portfolio is invested in the UK's largest companies, compared with the benchmark's 86pc FTSE 100 allocation, demonstrating a bias towards the less well-covered mid and small cap stocks. The active management approach is illustrated by having no exposure at all to several of the largest companies in the FTSE All Share, including Shell, BP, HSBC and Unilever. As a result, the fund should not be expected to perform in line with the benchmark, and there will be periods of underperformance, as was the case during the Covid pandemic. By sector, the portfolio is typically overweight towards financials, and the largest holdings currently include Standard Chartered and NatWest, as well as Direct Line, which recently agreed a takeover bid from Aviva. However, some profits have been taken from banking shares over the past year following strong share price performance. As a result, the largest overweight sector is currently industrials, with holdings including Keller, DCC and Coats. By contrast, the fund is underweight towards energy and healthcare. Alex Wright also manages the £3.3bn open-ended variation – Fidelity Special Situations – which has a very similar portfolio. However, Questor favours the investment trust as it has a lower management fee and is currently trading at a discount to Nav of 5.6pc, with a commitment by the board to buy back shares to keep the discount in single figures. Over the long term the investment trust's performance has been enhanced by modest gearing – typically 10pc – and the ability to take positions in less liquid companies. Although the emphasis is on capital growth, it pays a yield of 2.9pc via semi-annual dividends, and has increased its dividend every year for the past 15 years.
The Independent
06-03-2025
- Business
- The Independent
With even Poundland and B&M in trouble, what's next for Britain's ailing high street?
Poundland is on the City's discount sale rail. Despite posting a £1.6bn turnover last year, its European owner wants out. Investors in B&M, a similarly value-focused retailer, have also been heading for the exit. Despite an apparently robust trading update in January, they looked at the future, and especially its profit guidance, and they ran. Smart move. Last week, the group issued a profit warning and said its CEO Alex Russo was stepping down. The shares have been in long-term decline. Over the last 12 months, they're underwater by nearly 52 per cent. By contrast, the broad-based FTSE All Share index is up by 11.5 per cent over the same period. What's going on? Poundland is a victim of its European parent, Pepco, seeking to pep up its performance by streamlining the group and operating under a single brand. This leaves Poundland as an unwanted child with very poor prospects. Pepco boss Stephan Borchert said: "At Poundland, recent performance has been very challenging, impacted by declines in clothing and general merchandise following the transition to Pepco-sourced product ranges at the start of the year.' A sale, he said, was the preferred way forward for the retailer. Does this mean a buyer coming along and buying it for a pound? Perhaps that's pushing it a bit. Former boss Barry Williams has been slotted back in. He's shown he can turn a business around and he is likely to focus on value, with an increase in the number of products sold at a pound. It is some time since Poundland did away with selling everything at that price point because, obviously, inflation. However, as Pepco told its investors, he is being pitched into a retail hellscape. It didn't put it like quite that, preferring to say Poundland was operating in 'an increasingly challenging UK retail landscape that is only intensifying'. But faced with that, Williams will need a mighty magic wand to bring the business back to life and while Pepco still loves him, it isn't willing to stick around to see if he can deliver. That also explains investors being so down on B&M even though one wonders what Williams would surrender if someone offered him the chance to be in its position. An arm? A leg? The trouble is, the high street 's diminishing band of holdouts all face the same deep-rooted problems. It is not just the discounters that are looking aghast at the outlook. Their costs are going through the roof. Steep rises in the minimum wage, welcome in many respects, are nonetheless tough to handle when you're also paying higher national insurance contributions (NICs) for every member of staff you employ on top of that. It isn't just Rachel Reeves 's decision to increase the rate from 13.8 per cent to 15 per cent either. She also reduced the threshold. That means employers start paying after the first £5,000 rather than £9,1000. This is particularly hard on retailers, which have large workforces made up of relatively low-paid employees. Even the solidly profitable supermarkets – an increasingly tough source of competition for pound shops with their habit of price matching to the likes of Aldi – have been warning of price rises and job cuts. Investment plans have, meanwhile, been mothballed. David Bharier, head of research at the British Chambers of Commerce, said: 'UK firms are facing a double whammy of rising domestic taxation and a potential global trade war. Businesses are telling us that the rise in national insurance and the minimum wage will increase costs, stall investment, and cause them to rethink their workforce plans.' The BCC has downgraded its 2025 growth forecast for the UK economy to just 0.9 per cent from 1.3 per cent. It is far from the first institution to do that. The Bank of England cut its own prediction in half, to just 0.75 per cent. Small wonder. Consumer confidence remains mired in the red, where it has been for months, with business confidence similarly low. Chancellor Rachel Reeves has greeted the increasingly desperate calls for help, or at the very least a phased increase of the new tax rates, with a tin ear. So is it really unrealistic to think that Pepco would accept as little as a quid for someone to take the underperforming Poundland off its hands? Absence of a Damascene conversation from Reeves, who really needs to find some way of getting business back on the side if Labour is to stand a chance of making good on its growth promises, I don't think it is. As for the high street, the tumbleweed is blowing down it. If you live in a prosperous area, you may still find the odd shop amongst the cafes and the beauty salons, which have been doing well. If not, it's chicken shops and not much else. With gambling moving online, even the bookies have been giving it up as a bad bet. Reeves needs to wake up, fast.
