Rothschild's baby beats benchmarks

29th Nov 2011 07:59

RIT Capital, the investment trust, has been battered by 'the most torrid markets of my lifetime' says Jacob Rothschild, the Chairman of the firm.In the half-yearly results statement he describes Europe as the 'lead violinist in a discordant band'.Quite.That said, Lord Rothschild can take some comfort from the fact that the 9.6% decline he has seen in RIT's net asset value (NAV) between the end of March and the end of September has been considerably better than the benchmark indices the firm compares itself to. Over the same period, the MSCI World Index has fallen 15.1% and the FTSE All-Share has dropped 13.5%.At the end of the reporting period RIT's NAV stood at £1,793.9m, down from £1,984m in March.Rothschild outlines the firm's current strategy in the update, which involves maintaining positions on gold, while avoiding sterling and euro currency positions. RIT has, however, increased exposure to the US and Canadian Dollar.Clearly, for the time being, caution remains the watch word, with Lord Rothschild adding: 'In these exceptionally volatile markets our main focus remains one of not chasing the pendulum swings between "risk-on" and "risk-off"; it is to identify areas of opportunity beyond the present uncertainty.'An interesting snippet from the update are the positions RIT is taking on corporate bonds with Rothschild arguing that 'With yields of around 8% in some cases for senior credits, these are potentially competitive with equity returns, and the risk of loss is lower.'Shares in RIT were down very 0.3% in early trading. Over the year-to-date the group is up 8.5%. Over the last five years the stock has gained 40%.BS