Capital Gearing Trust

Capital Gearing Trust’s investment objective is to generate returns ahead of inflation, without losing money. The trust looks to achieve these returns over the long term through a global portfolio of equities, bonds and commodities offering both diversification and risk management.

The investment process sees assets placed in three core buckets. The first bucket is risk assets, which includes the likes of equities/funds, property and infrastructure. For this, the team may use investment trusts and ETFs where appropriate (the managers will typically use passives if they find a suitable opportunity).

The second bucket is inflation-linked bonds – this is because they have a negative correlation to equities and typically outperform conventional government bonds – which includes the likes of US TIPS, UK Linkers and other high-quality sovereigns. Both the risk assets and inflation-linked bonds buckets can hold between 20-50% of the total assets of the trust.

The remainder will go into the third bucket – this is the managed liquidity reserve, which includes cash & treasury bills, short-dated government bonds and short-dated credit. This bucket also looks to reduce the duration and volatility of the portfolio.

The final portfolio is typically quite diverse with between 175-200 holdings. With an ongoing charge of 0.41%*, the trust is also very cost efficient.

Capital Gearing Trust places capital preservation at the heart of its investment process. However, there are a number of risk management processes in place to evaluate ongoing performance and positioning.

Risk management is carried out through continuous monitoring of position sizes, asset class weightings, and overall portfolio construction. The investment team regularly evaluates the balance between risk assets and non-risk assets, ensuring alignment with prevailing valuations and macroeconomic conditions.

There are various levels of oversight. CGAM has four committees that report up to the Board: the Investment Oversight Committee, Remuneration Committee, Audit Committee and the Risk Oversight & Valuations Oversight committee. The Investment Oversight Committee reviews, on an annual basis, the investment style of the firm. The Risk Oversight & Valuations Committee reviews, on a quarterly basis, various measures including liquidity risk, concentration etc.

The board of CGT also have oversight of the portfolio and will challenge the managers where appropriate.

Capital Gearing Trust’s Responsible Investment approach varies across asset classes, based on their capacity to influence the behaviour of a security issuer. In those asset classes in which they have limited influence e.g. government bond and corporate bond markets, they employ exclusions to ensure their Responsible Investment (RI) values are reflected. For government bonds they exclude issuers who do not achieve high rankings on a range of human rights, press freedom and government effectiveness criteria. For corporate bond issuers they exclude sectors that may inflict high levels of harm on society including controversial weapons, tobacco, gambling, thermal coal, adult entertainment and predatory lending.
 
For their investment trust holdings they look to deliver positive change through active engagement which they consider the most impactful ESG integration approach. They devote significant resources to active engagement with managers and boards to deliver improved ESG outcomes. CGT votes at every AGM for all their holdings and frequently vote against board recommendations when they have concerns
 
The firm report on all aspects of Responsible Investing every six months, including case studies of engagement activities, updated carbon metrics, their voting record and links to any changes in their RI policy. Development and compliance of the Responsible Investing Policy is overseen by the RI Committee that in turn reports to CGAM’s board on its activities. CGAM is a signatory to the UN PRI.

CGT’s investment policy permits gearing, including the use of derivatives up to 20% of the value of net assets. However, the board and management do not use this facility as they believe it will impact their aim of capital preservation.

The trust has traded at a slight discount to NAV over the past three years (2.2% discount at 3 February 2026).

*as at 3 February 2026