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The world’s greatest investors: Peter Spiller

Over time, Peter Spiller changed the strategy of the Capital Gearing Trust to focus on preserving capital.

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Peter Spiller studied philosophy, politics and economics at Oxford, before becoming an oil analyst for stockbroker Myers & Co. He then moved into corporate finance, but in 1980 he returned to Myers to become a fund manager. Two years later, he took over management of the struggling Capital Gearing Trust, which he continues to run today. In 1988 he joined Cazenove, staying there for 13 years, before setting up his own firm, CG Asset Management, with Cazenove colleague David Brazier.

What is his strategy?

Before Spiller took control of Capital Gearing, it pursued a very aggressive strategy using leverage to boost returns (hence the name). Over time, he changed the strategy to focus on preserving capital. The portfolio is now mainly in lower-risk assets: government and corporate bonds, preference shares and cash.

Did this work?

Between 1982 and 2016 the trust returned an average of 16.6% per year, compared with 9% for the stockmarket. This was partly due to some very strong performances in the 1980s and the fact that the fund was trading at a discount to net asset value when Spiller took over. It has returned 8.95% a year since 1998, compared with 4.46% for the market.

What were his best trades?

Spiller's conservative investment stance is often unfashionable, but it effectively shielded the fund from the huge declines that took place during the bursting of the dotcom bubble in 2000 and the financial crisis in 2008. Share prices more than halved during both bear markets, but his worst annual performance (in net asset terms) was in 2014, when the fund lost 2%.

What can investors learn?

Many people focus on maximising gains, but reducing losses is also important. If your assets halve in value, you subsequently need to double them to get back to where you started. Spiller is extremely bearish on both stocks and bonds at present, warning that while shares have priced in strong growth, bonds have priced in low levels of inflation. He thinks that both views are wrong, and that we are likely to see low growth and high inflation simultaneously.

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