How a cautious approach to investing has paid off for Capital Gearing Trust

The Capital Gearing Trust’s strategy focuses on not losing money. It has proved very successful, says Max King

People in the 1960s
US inflation built gradually in the 1960s
(Image credit: © Robert Altman/Michael Ochs Archives/Getty Images)

When Peter Spiller took over the management of the Capital Gearing Trust (LSE: CGT) in 1982, it had assets of just £500,000. Now, 39 years on, the fund is valued at £864m and its shares have multiplied 237 times in value, equivalent to a compound annual return of 15%. Under Spiller, the trust has only had one down year, 2013, when it lost 2%. This performance far exceeds that of all stockmarket indices, both in terms of performance and volatility.

Returns have been more pedestrian in recent years. A five-year return of 41% reflects a compound annual return of 7.1%, a little ahead of the FTSE All-Share index, but well behind global markets. This has not prevented the shares from trading at a persistent premium to net asset value (NAV), currently 3%, which has enabled CGT to continue issuing shares. Its management fee of just 0.35% adds to the attraction.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.