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Capital Gearing Trust cuts fees

Capital Gearing Trust cuts fees

The defensive Capital Gearing Trust has become the latest investment company to reduce its management charge.

From 6 April 2014 the £92 million trust will bring its fees down from 0.85% to 0.6%.

The trust, which launched in 1973 and is managed by Peter Spiller (pictured) and Alastair Laing, runs a strongly conservative portfolio, with 10% currently in cash and 30% in index-linked government bonds.

As a result it has performed well in bear markets but lagged significantly during bull phases.

For example, Capital Gearing returned 4.9% in 2006 while the FTSE All Share surged by 16.8%. But in 2008 it eked out a 4.7% return while the FTSE lost 30%.

Similarly Capital Gearing dropped 9% last year while the FTSE gained 20.8%. So far this year the fund has outperformed, though, returning 6.4% while the FTSE is down 0.1%.

Iain Scouller, an analyst at Oriel Securities, has highlighted Capital Gearing as one of his defensive picks alongside better known vehicles such as RIT Capital, Ruffer and Personal Assets.

‘Following a strong year for many global stock markets over 2013, most are struggling to make progress this year,’ he said.

‘Indeed some of the increasingly speculative activity that we have seen in some areas such as high demand for a number of equity IPOs and the increasing use of leverage to finance some stock market investment makes us feel distinctly nervous. We do think the risk of a market correction is growing.’

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