11th Aug 2015 06:33
LONDON (Alliance News) - RIT Capital Partners PLC, the investment trust chaired and part owned by Lord Rothschild, on Tuesday said it has been able to profit by cutting exposure to the US equity market and investing instead in Japan and the Eurozone.
The investment trust's share price increased by 11.8% on a total return basis in the first six months of 2015. Its net assets increased to GBP2.43 billion from GBP2.30 billion in the same time.
Lord Rothschild, the trust's chairman, said the economic stimulus policies pursued by central banks since the financial crisis of 2007-09 have continued. The policies have led to increased asset prices, particularly in Europe and Japan, where central banks have set low interest rates and used quantitative easing.
"As a consequence, equities in Europe and Japan have made gains, while the US and UK have done less well. The first group has pursued aggressive, stimulative policies, while the Anglo-Saxon countries are contemplating small steps to remove some of the accommodation in the light of improving economic prospects. The question now is whether stock market values are sustainable as interest rates rise and quantitative easing tails off," Lord Rothschild said in a statement.
"Against this background your company, by reducing its exposure to US equity markets, has been able to capitalise on the strong performances in Japanese and eurozone markets. Gains were also realised from Chinese investments. Overall, our quoted equity investments have meaningfully outperformed market indices," Lord Rothschild added.
"In foreign exchange we continued to emphasise the US dollar and more recently sterling, while adopting a negative exposure to Asian currencies. This approach contributed to profits, notwithstanding sterling's appreciation against most currencies during the period," Rothschild added.
The chairman said he is "particularly mindful" of the principle of preserving capital, citing diminishing growth forecasts for world economies and heightened stock market valuations. He is also concerned about slowing economic growth in China, and the political and economic troubles in the Middle East, Greece, Russia and Ukraine.
Rothschild said that "the burden of vastly increased and often unproductive debt must surely undermine prospects for future growth".
"We continue however to search for compelling investment opportunities, recognising that the climate is one where the wind may well not be behind us," the chairman added.
By Samuel Agini; [email protected]; @samuelagini
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