"Monetary policy has supported bond markets for a decade. Low interest rates and low inflation have seen bond investors enjoy many years of gently rising returns. 2017 was the year this benign environment finally started to reverse: interest rates ..."
Had a small panic over these at the weekend given the large falls in tobacco shares at the end of last week. At their year end, 12.6% of Personal Asset Trust's shareholders' funds were in BATS/Philip Morris/Altria. In the end, I decided to hope that wiser heads would prevail next week and that the fall in tobacco shares would be seen to be an over-reaction. In the long term, I will probably sell because I don't like tobacco shares. Eventually governments in the third world may do more to cut tobacco sales. I need to learn self control and not be panicked by Mr Market.
"We name the investment trust directors and managers that have meaningful 'skin in the game'.We all want our investments to perform well, but when things get sticky and losses are sustained, there is some consolation to be had when it is not only ..."
This Trust is my core holding and will remain so as far as I can see. I have no problems with investing in drink and tobacco companies. I do agree with Tomhabuck that the Board seems rather complacent. However, as they will tell you this is what we do and if you do not agree invest elsewhere. The other Trojan funds complement a PAT holding rather well, I find. I have put a weak buy on this note as it may be better to wait for a dip.
With this trust you are buying a well thought out and enunciated point of view in the way to run money - check website. The portfolio takes a very defensive stance where not losing money is the priority. The directors all have their own money invested to a greater and lesser degree. To my knowledge they have invested in tobacco for a long time seeing the merits of the secure income stream while obviously not worrying about the ethics. When markets are in irrational bull mode then this will under perform peers but when in bear mode it usually outperforms.
If you don't buy into this philosophy then it would be better investing elsewhere IMHO.
For what its worth I use this trust as a bedrock holding to give stability in dark times which I am sure we will see again. Hope this helps.
I have about 5% of my stash in this company, but with the new ISA year coming up, I can't decide what to do. The virtues of the company are that it has the sort of portfolio I would have built had I the time, brains and cash. It is also very transparent about what it holds. The disadvantages are that from the outside, the board looks a bit, how shall we say, comfortable and I don't know if they get a lot of external challenge from Non-Execs. Also, they seem to have a lot of cash in tobacco products. Now I'm far from an ethical investor, but that is close to a line I might draw. So what's a chap to do? Buy more or hang on to what I've got.? Help, advice, irrational abuse all welcome
Thank you for saving me the trouble. That is indeed the quarterly to which I was referring
If I am correct, RA also discusses their selection of gilts in another quarterly (whose reference I also do not have to hand!). I believe his argument was that they are selected for their quality in the event of instability eg Singapore, and also being inflation-linked
If the price of gold should fall from current levels, I am wondering if there is the intention to use the high cash holdings to make further gold purchases. I believe an absolute maximum of 15% has been stated, so there is still room to do so
I think you may be referring to quarterly no. 70 dated November 2013 where under the heading "US Treasuries" there is the following.
One question I am asked increasingly often by shareholders concerns the risks of holding US Treasury securities. Here is a typical query:
I have a modest holding in Personal Assets via my ISA. Following the re-
cent débâcle in the USA with likely on- going severe political problems and on top of this the imminent end of quantitative easing I am getting a bit concerned about Personal Assets holding of US Treasuries. Can you tell me please how the directors see the situation viz the holding of US Treasury stock?
I replied that our holdings were in US Treasury Inflation Protected Securities ("TIPS") and that we held them for defensive reasons, as a hedge against inflation. Yes, the situation in the USA has been worrying, and sentiment in the markets has been dominated by fears of an end to QE. However, if we cant ultimately trust US Treasuries there is not much, if anything, in the way of shares and securities that we can trust. As regards the fiscal cliff, I expect that there will be embarrassing expedient after embarrassing expedient, with disaster endlessly postponed for the simple reason that the Republicans will not dare to shut the country down, however much they may deplore the gap between expenditure and income.
I always enjoy Robin Angus's commentary on the quarterly report of PAT and long may it continue. One good point from the November commentary is the importance of "thinking the unthinkable". If I could act as devil's advocate, I would suggest that this maxim has not been applied to PAT's portfolio which is meant to provide investors with capital preservation as a principal aim. If you believe in thinking the unthinkable I would argue that holding almost half the portfolio in cash, UK gilts and US TIPS is a risky approach because in the event of a systemic collapse in the financial system (as almost occurred in 2008 with the Lehman Bros debacle) cash, gilts and TIPS may well become almost worthless since they are not backed by physical assets, rather they are pieces of paper which rely on confidence being maintained in monetary systems. In the event of a systemic collapse in the global financial system I could see governments creating new currencies which are asset-backed in order to restore confidence. You can bet your bottom dollar that the obsolete old currencies would lose alot of their value, as would the instruments, such as gilts and TIPS, denominated in them. Of course equity valuations would also be hit very hard but the key point is that global companies producing consumer goods have assets in the form of factories, distribution systems, brands and know-how which I believe would be much more reliable stores of value than paper IOUs in the event of a catastrophic global financial meltdown . Of course you can argue that my scenario of a global collapse in financial systems is so unlikely as to be unthinkable................
I would be interested to hear the counter arguments.
You can't really tell the value of gold until you need it and then it's too late to buy it. If you need it the lost dividends over the holding period pale into insignificance. As they have held it for a while I guess their average price is somewhat lower than todays? I should really know this but do trust them to run it properly so don't tend to fret about it much.
The gold element is purely the last resort in case of melt-down. If the equities and bonds were to fall together it is to gold the money would run. What % should they hold - I'm not sure - but am glad there is some as ballast.
I also hold gold outside of PNL as one element of my entire portfolio. Look towards 5% total allocation but don't tend to control the % tightly. It's there, just in case. Hope it's never called upon to bail me out in a collapsing economy.
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