We almost ditched this investment trust from our model portfolio. We’re glad we didn’t

We were worried that Lord Rothschild’s departure from RIT Capital Partners would mean it turning into a bog standard multi-asset fund. Thankfully, says Merryn Somerset Webb, that’s not the case at all.

South Korean e-commerce business Coupang has rescued RIT

(Image credit: © SeongJoon Cho/Bloomberg via Getty Images)

By Merryn Somerset Webb

published 19 March 2021

in Advice

We recently updated the Moneyweek investment trust portfolio. The key subject of the discussion was RIT Capital Partners – it hasn’t been the best of performers and there is some worry among our panel members that without Lord Rothschild at the helm we are effectively overpaying for a bog standard multi-asset fund.

We decided to keep it (lethargy is often the investor’s best friend) for two main reasons. First, it was trading on a 7% discount to net asset value, which seemed undeserved. And second, we had high hopes that some of its private equity investments would turn out to be worth rather more than their book value suggested. Good news: one has done just that.

Later last week, South Korean e-commerce business Coupang listed in New York at $35. It ended the day at $49.25. RIT had an investment in the firm valued at £140m (around 4% of RIT’s net assets) in December. Thanks to the IPO, the value of that stake is up over 220% – making it worth more like £440m or 8% of the trust’s NAV.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

That valuation won’t be reflected in the official NAV until 31 March but, as Numis points out, this is clearly “a fantastic result for RIT”. The shares are up 7% in the last week and the discount (based on the pre IPO NAV) is down to a mere 0.26%. We’re happy with that – and so are the analysts at Numis.

RIT has, they say, “effectively transitioned to the next generation of its management team” whilst retaining a strong record of both providing downside protection and participating in market downside. All good.

Explore More

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.