These two investment trusts are conservatively managed, with capital preservation as their first priority. While they may not rise as extravagantly as some of their peers in raging bull markets, they don’t fall as heavily when markets crash. By this means, they’ve built up their long records of market outperformance.

RIT large

RIT Capital Partners is chaired by Lord Rothschild and enables private investors to invest alongside the famous family of financiers to protect and enhance their wealth over the long term.

According to the trust’s latest results, “£1,000 invested in RIT at inception in 1988 would be worth in excess of £30,000 today compared to the same amount invested in the MSCI All Country World Index which would be worth approximately £6,700.” And this has been achieved by the trust having “participated in 75% of market upside but only 39% of market declines.”

Part of RIT’s success comes from its ability to invest without restraint. It’s able to allocate capital internationally, across a range of asset classes, both quoted and unquoted. It also utilises the talents of some external fund managers, providing exposure to investment areas (for example, hedge funds) that are largely inaccessible to small private investors.

Currently, with “share prices have in many cases risen to unprecedented levels at a time when economic growth is by no means assured,” the trust is cautious. It stated in its latest results: “We do not believe this is an appropriate time to add to risk.” Regular quoted equity (long) represents 36% of the portfolio, with the remainder in diverse assets, notably absolute return & credit (25%), private investments (22%) and hedge funds (21%).

PAT on the back

Personal Assets Trust’s investment policy is “to protect and increase (in that order) the value of shareholders’ funds per share over the long term.” As well as the similar philosophy to RIT, PAT shares its current cautious view of markets, stating: “After a prolonged bull market in both bonds and equities we therefore remain focused on capital preservation, not the maximisation of upside.”

PAT’s equity exposure is 43%, with its holdings being predominantly defensive global giants. Its current top five positions are Philip Morris, British American Tobacco, Microsoft, Nestlé and Coca-Cola. In contrast to RIT, hedge funds and private investments don’t feature, with the remainder of PAT’s portfolio being in US and UK inflation-linked and short-dated government securities (44%), gold (9%) and cash (5%).

So, while RIT and PAT share a common investing philosophy and current general outlook on markets, their portfolios are far from identical, making both trusts well worth holding, in my view.

The post Two investment trusts I’d buy and hold for 25 years appeared first on The Twelfth Magpie.

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G A Chester has no position in any of the shares mentioned. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

But can we make decent returns, without going on a roller-coaster ride, or is the only option to put cash in the bank and see its value gradually eroded over time by inflation?

Safe haven

Gold has typically been a safe haven in times of fear and trouble. And these days it’s a simple matter to buy a fund that tracks the price of gold. The long-established SPDR Gold Trust is popular with US investors, while in the UK options include ETF Securities Physical Gold.

You only have to look at the financial crisis for confirmation of gold’s safe-haven credentials. While equity markets collapsed dramatically in 2008, the SPDR Gold Trust gained 5%.

All well and good. But gold can be as volatile as equities. For example, we’ve seen gains and falls of as much as 30% in a single year over the past decade.

Never lose money

One of the most famous dictums of equity investor extraordinaire Warren Buffett is: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” So, should we entrust our cash to Buffett’s Berkshire Hathaway (NYSE: BRK-B.US)?

Well, Buffett’s above dictum is more about avoiding irreversible losses from the collapse of a poor business than about avoiding the ups and downs of a company’s share price, for he has also said: “Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market”.

Berkshire Hathaway’s shares plunged by more than 30% in 2008, while its best year over the last decade has been a rise of more than 30%. With Buffett, then, you’re on no less of a roller-coaster ride than you are with gold.

The table below shows annual returns over 10 years for SPDR Gold, Berkshire Hathaway and the third subject of this article Personal Assets Trust (LSE: PNL).

Source: Morningstar

Let’s get personal

As you can see from the table above, Personal Assets Trust (PAT) has progressed over the last 10 years without the big ups and downs displayed by both gold and Berkshire.

This is because PAT’s investment policy “is to protect and increase (in that order) the value of shareholders’ funds per share over the long term”. In practical terms, “this means that we try to make as much profit as we safely can when markets rise and minimise losses or even achieve modest gains when markets fall”.

The price for PAT’s comforting low volatility over the past decade has been a decent annualised return of 5.8% — which is, however, somewhat lower than gold (6.2%) and Berkshire (8.7%).

In its latest results, released this week, PAT reported that since 1990 its net asset value has increased by 548% compared with the FTSE All-Share’s 228% and RPI’s 109%.

If this kind of return, without a roller-coaster ride, appeals to you, you may want to have a look at PAT’s latest annual report. Indeed — for all investors — the trust’s assessment of the current climate for investing (on page 3) is well worth a read.

The post Are gold, Berkshire Hathaway Inc. & Personal Assets Trust plc the only investments you need? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

G A Chester has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Berkshire Hathaway (B Shares). We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.