RIT Capital Partners update: discount to NAV narrows

RIT Capital Partners (LSE: RCP), one of the components of the MoneyWeek investment trust portfolio, saw a significant narrowing in its discount, the difference between its share price and net asset value (NAV) in March.

As of 31 March, at a NAV per share of 2,673 pence, the fund traded at a discount of 4.6%; much lower than February when it traded at a discount of 8.4%.

RIT Capital Partners usually outperforms both its benchmarks over the long-run, but this trend has been in decline over the past few months.

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RIT’s two benchmarks – CPI plus 3% and the MSCI All Country World Index (50% sterling) – were up 2.5% and down 3.7% respectively.

RIT’s strategy is typically a long-term one, and it does not aim to beat its benchmarks over short-term periods. “Instead it tries to show strength when stockmarkets are weaker and provide modest growth over the long term,” Hargreaves analyst Tom Mills wrote last year.

For the most part, the trust has traded at a premium over the last five years. However, it moved to a discount in the “turbulent market conditions of Q1 2020” and it has yet to regain a premium rating, says William Heathcoat Amory, head of Kepler Partners’ investment trust research team.

But Amory thinks that uncertain market conditions could bolster investor risk appetite and benefit the trust: “If uncertain market conditions remain, investors’ appetites may return to more defensive strategies… and the current discount could revert to a premium (the average for the past five years is a premium of 2.2%),” he says.

RIT Capital Partners, which was formerly known as Rothschild Investment Trust, is a UK-based investment trust that specialises in investing in quoted securities and quoted special situations.

The trust listed on the London Stock Exchange in 1988, and the trust is managed by J.Rothschild Capital Management. The fund’s managers invest in a wide range of different securities, equity and bonds funds, real estate, currencies, precious metals, to name a few.