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RIT Capital cuts back on equity risk but eyes technology

By Oliver Haill

Date: Monday 14 Aug 2017

RIT Capital cuts back on equity risk but eyes technology

(ShareCast News) - Investment company RIT Capital Partners reported a net asset value total return of 4.0% for the first half of the year, cautioning that managers have only a moderate exposure to equities as they "do not believe this is an appropriate time to add to risk".
NAV rose to £2.8bn by the end of June from £2.69bn at the end of December, with NAV per share up 3% to 1,784p from 1,730p.

Net assets growth of £104m for the period before accounting for distributions, namely the 16p per share dividend paid in April, with another 16p declared for October.

The quoted equity portfolio, made up of individual stocks holdings and fund managed externally, benefitted from several cash distributions from external managers, together with underlying growth in the value of some of the directly held investments.

Holdings of currencies weighed on the portfolio as sterling rebounded against the US dollar, following its post-referendum decline.

As of now, currency holdings are spread mainly between sterling, the dollar and the euro.

Chairman Lord Rothschild said the board "do not believe this is an appropriate time to add to risk", noting that many stocks have risen to "unprecedented levels at a time when economic growth is by no means assured" and that the period of central bank monetary accommodation "may well be coming to an end" and widespread geopolitical problems.

"We therefore retain a moderate exposure to equity markets and have diversified our asset allocation towards equity investments where value creation is driven by some identifiable catalyst or which are exposed to longer-term positive structural trends," he said.

"We have a particular interest in investments which will benefit from the impact of new technologies, and Far Eastern markets, influenced by the growing demand from Asian consumers."

But the company is looking for investment opportunities in technology and has entered into a partnership with Social Capital, one of Silicon Valley's leading technology investment firms, led by Chamath Palihapitiya.

"We will invest in a range of their funds to benefit from Social Capital's data-driven approach and expertise in this area, as well as looking at specific opportunities," said Rothschild.

Francesco Goedhuis, the chief executive of J. Rothschild Capital Management, will join the advisory board of Social Capital, and Social Capital will open an office in St. James's Place, next door to RIT.

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