Personal Assets Trust’s final results: the ii analyst view

Protecting wealth during red-hot inflation is like running against the wind, but Sebastian Lyon has done it again, says interactive investor.

Over the year to 30 April 2022, Personal Assets (LSE:PNL) Trust's NAV per Share Total Return was 7.1% compared to 8.7% of FTSE All-Share Total Return over the year to 30 April 2022. In share price total return terms, the trust underperformed the FTSE All-Share on a total return basis by 0.6%.

An additional special dividend for the year to 30 April 2022 of £1.40 per share and it will be paid in July 2022.

Chair Iain Ferguson said: “We track the performance of the company from 1990 and since then the NAV has grown at an annual compound rate of 7.0% compared to 4.4% for the FTSE All-Share Index and 3.1% for RPI.”

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“Consistently over the last 22 years the company has been less volatile than equities in general and also less volatile than any of the investment trusts in the AIC Global and AIC Flexible Investment Sectors.”

“The investment manager's focus remains on the avoidance of permanent capital loss (our preferred definition of risk) and on growing the real value of the company's capital over the long run.”

Investment manager Sebastian Lyon said: “We will endeavour to continue to preserve and grow shareholders' funds in real terms, but we are under no illusion as to the scale of the challenge ahead.”

ii view:

Tracy Zhao, Senior Fund Analyst, interactive investor, says: “In challenging times, amid market volatility and runaway inflation, protecting as well as growing wealth, is like running against the wind. There’s only a small handful of investment trust fund managers brave enough to try it, and Sebastian Lyon has managed it again.

“Lyon is under no illusion about the scale of the challenge ahead, with inflation running at a 40-year high, but it is no wonder that trusts like Personal Assets are becoming increasingly popular with investors. Keen followers of the trust will be grateful for the insights on inflation contained in today’s results.

“We hugely welcome the trust’s decision to seek approval at the next AGM to split each ordinary share on a 100 for one basis, rather than the current share price of around £500 per share. It is long overdue and something that the Board have probably pondered on for too long. If approved, this will open up this popular and successful trust to a broader range of investors and a broader range of budgets.”

Personal Assets Trust, launched in 1983, aims to protect and grow shareholders’ wealth by investing globally in multiple assets classes. Troy Asset Management Limited has been the investment manager to the trust since May 2020. The trust is one of most-held trusts on the ii platform.

Since the end of 2021, we have seen inflation surge, the cost of living squeezed, and interest rates rise. Capital preservation strategies have become increasingly popular with investors.

The trust is designed to provide protection for investors in the stormy weather. The performance of the trust continues to be impressive, especially given the low equity exposure. Recently, the manager has dialled down exposure to equity markets even further, to around 38%, increased allocation in index linkers to around 35% and added weight to gold bullion, which is the largest holding in the trust, building a portfolio to help defend investors’ wealth. Through the financial year ended April 2022, the trust has grown its distribution reserve and the additional special dividend of £1.40 per share will be well received by the investors.