TrustInvestor 4 August 2016 (www.trustinvestor.co.uk) Delegating asset allocation decisions to the professionals via Investment Trusts Research highlights the significance of asset allocation in driving investment portfolio returns over the long term. In other words tweaking, or making bigger calls, as to the allocation of an investor's capital between the different asset classes ‐ equities, bonds, property, commodities (both commodity shares and the physical asset e.g. gold), and cash. So for the private investor not wanting to make such decisions, what are the options? A number of trusts have flexibility to adapt their asset allocation depending upon the manager's view of the economic outlook, and a number of options exist in the AIC's new Flexible Investment Sector. "New" these trusts are not, however, and neither are their managers many of whom are seasoned investment professionals with significant track records, and holdings of their respective Trust’s shares. Performance ranking: On a long‐term (10‐year) view 1. RIT Capital (listed in 1988) (AIC (3 Aug 2016): Ranked 1st over10 years delivering share price total return of £210.9 from a £100 investment) Corporate objective To deliver long‐term capital growth, while preserving shareholders’ capital; to invest without the constraints of a formal benchmark, but to deliver for shareholders increases in capital value in excess of the relevant indices over time. Investment Policy To invest in a widely diversified, international portfolio across a range of asset classes, both quoted and unquoted; to allocate part of the portfolio to exceptional managers in order to ensure access to the best external talent available. Risk RIT is clearly focused on preserving capital and illustrates its success in the following terms – “…since [the] Company’s listing in 1988, we have participated in 76% of the market upside but only 39% of the market declines.” RIT has calculated "participation" on a monthly basis since inception tracking its NAV movement against the indices it tracks against to reflect its performance. The company’s investment policy can be seen reflected in its diverse asset allocation & geographical & currency exposure (May 2016 factsheet). The Company is highly rated by independent agencies including Morningstar (five star rating) and FE Trustnet (four crown rating) and is one of Investors Chronicle’s Top 100Funds of 2015 and a Money Observer fated fund Return RIT’s historical performance has been strong delivering share price total return to shareholders since inception (1988) of 12.4% per annum (against the MSCI world (in local currency) of 6.3% (source: Annual Report 31 December 2015). This table usefully illustrates “historical performance” since 1998, when the Trust was listed. [http://www.ritcap.com/historical‐performance] Shareholder Communication As well as the AGM, the Trust provides a facility for shareholders to sign up for email alerts on its website. “Skin in the game” Lord Rothschild, the Trust’s Chairman since 1971, when the trust had a value of £5m, is a major shareholder owning 18.16% of the share capital (as at 31.12.15). At 5 August the Company's market cap. is £2,745.06m. Discount Control Policy Unlike some Trusts covered in this blog there is no defined policy. However, the Trust's shares mostly trade at a premium to net asset value, although periodically they fall to a discount. As with all Trust shares that trade at a premium investors may choose to wait to invest at a discount to avoid overpaying. Of course for long‐term investors this issue may be less relevant.