Private equity investment trust tips

September 16, 2013 by  
Filed under Solar Energy Tips

Private equity investment trust tips

Almost all Money Observer’s aggressive investment trust tips from 2012 have had a great run this year but our defensive tips have generally fared less well.

Some strong performers have been among the eight changes made this year, with one coming in this instalment.

The change in the private equity sector sees our defensive choice return after an absence.


The ordinary shares of Pantheon International Participations have more than doubled in value since they joined our roster three years ago; they remain our aggressive choice. The discount on this fund of private equity funds is still around 20%, and its three-year net asset value (NAV) returns have been well above average for its sector.

With the US economy proving relatively resilient, PIP’s 54% US weighting remains a key attraction. In addition, around two thirds of the portfolio is in funds that made their first investment in or before 2006, so realisations should be flowing through; only a fifth relates to large/mega buyouts from vintages 2005 to 2007, which is when the industry was tempted into dangerously high levels of gearing.

PIP’s sectoral exposure is attractive, with around 75% in information technology, consumer discretionary, industrials and healthcare.


HgCapital Trust returns as our defensive choice. It boasts the best long-term record in the sector, with NAV returns of more than 18% compound over the past 10 years and therefore the shares fully deserve the low single-figure discount.

HGT invests directly in mid-market buyouts, mainly in northern Europe, including 54% in the UK. Manager Nic Humphries says the team has been cautious of western European economic prospects since 2009 and remains so. However, he is confident the trust’s focus on high-quality growth companies in IT, healthcare, industrial services, media and renewable energy will help it to continue to achieve good returns.

“Our investment strategy is focused on using deep sector expertise to identify market niches that will exhibit strong secular growth despite a weak overall economy and provide consistent opportunities to invest in multiple businesses that benefit from these fundamental growth trends,” he says.

Humphries says the team is cautious about new investments, but is finding “pockets of opportunity to buy market-leading businesses at reasonable prices”. Cash of 22% provides scope to capitalise on a market setback, but a drag if markets power ahead.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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