Personal Assets Trust Is Being Outstripped By Inflation – Can It Recover?

TL;DR

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Personal Assets Trust’s net asset value increased 20.8% over the five years to the end of August, while UK CPI inflation averaged 5% a year over the same period, equivalent to 27.5% cumulatively. The figures show the trust’s return fell short of inflation; the supplied report does not establish whether or when it will recover its purchasing-power loss.

Personal Assets Trust gained 20.8% in net asset value over the five years to the end of August, but UK consumer price inflation averaged 5% a year across that period, reaching 27.5% cumulatively, according to MoneyWeek. The comparison means the trust’s reported NAV increase did not keep pace with the cited rise in prices, raising questions for investors who chose wealth-preservation funds to protect purchasing power.

MoneyWeek’s figures put Personal Assets Trust’s annualised NAV return at 3.85% a year over the five-year period. That was below the reported average annual CPI rate. The article describes the trust as among several wealth-preservation vehicles that lost value after inflation, rather than reporting a nominal fall in its NAV: its stated NAV performance was positive.

The comparison also covers Ruffer and Capital Gearing. Ruffer returned 20% on the measure cited, or 3.7% annually, while Capital Gearing returned 11.5%, or 2.2% annually. Both gains were also below the article’s 27.5% cumulative CPI figure. These numbers refer to the five-year period ending in August; the source excerpt does not provide a more precise date or details of the calculation methodology.

The report’s central point is the difference between an increase in investment value and an increase in what that investment can buy. A positive NAV return does not by itself mean an investor’s purchasing power rose if prices increased faster. The cited figures describe past performance and do not show what the trusts will return in future.

The Cost of Falling Behind Inflation

For investors using a trust as a wealth-preservation holding, an inflation-adjusted shortfall matters even when the nominal value has risen. If prices rise faster than an investment, the portfolio may buy less than before, which can undermine the purpose of holding it as a defensive part of a wider investment plan.

The comparison is particularly relevant to savers assessing results over several years rather than focusing only on whether a fund posted a gain. However, these figures alone do not show the experience of every investor. They are NAV returns, and the material provided does not state how share-price movements, fees, distributions, taxes or individual purchase dates affect an investor’s personal outcome.

Nor does a five-year comparison settle whether the trust can recover. It identifies a period in which returns lagged inflation; it does not establish the causes of that performance or provide evidence that future returns will be higher. Investors would need more information about the portfolio, investment approach and subsequent performance to make a fuller assessment.

How the Five-Year Figures Compare

Personal Assets Trust, Capital Gearing and Ruffer are presented in the MoneyWeek report as wealth-preservation trusts. The report says investors who turned to such trusts during the past five years may have been disappointed because their returns did not match inflation over the stated period.

The comparison uses UK inflation measured by the consumer price index. MoneyWeek gives average annual CPI inflation of 5%, or a cumulative increase of 27.5%, and compares that with each trust’s reported return to the end of August. Personal Assets Trust’s 20.8% NAV rise equates in the report to an annualised 3.85% return; Ruffer’s 20% gain to 3.7% annually; and Capital Gearing’s 11.5% gain to 2.2% annually.

This is a retrospective comparison, not a forecast or a full evaluation of the trusts. The source material does not specify the exact start date, explain its return calculations beyond the NAV reference for Personal Assets Trust, or provide later figures. The comparison should therefore be read within those limits.

““With Personal Assets Trust (LSE: PNL), Capital Gearing (LSE: CGT) and Ruffer (LSE: RICA) all losing value after inflation, many investors who turned to wealth preservation trusts over the past five years will have been disappointed.””

— MoneyWeek

What the Figures Cannot Establish

The available source material does not explain why Personal Assets Trust lagged inflation, identify which holdings or market conditions affected its return, or set out a forecast for its future performance. It also does not state the exact calendar years covered by “the past five years” or specify the August year beyond saying returns run to the end of that month.

It is also unclear from the supplied figures how the results would compare with returns after costs and distributions, or with the trust’s share-price performance over the same dates. A NAV-based figure measures the value of underlying assets per share and may differ from what an investor experiences when buying or selling shares on the market. The source does not provide enough detail to calculate a precise inflation-adjusted return for an individual investor.

Most importantly, the historical shortfall does not answer whether the trust will recover purchasing power. That depends on future investment returns and inflation, neither of which is established by the past-period data.

What Investors Can Watch Next

The next useful evidence would be updated NAV and share-price performance for Personal Assets Trust, alongside a clearly dated inflation comparison. Further reporting on the trust’s portfolio and investment decisions could help explain the historical result, but the source material supplied here does not identify an upcoming announcement or specific milestone.

Investors reviewing the figures can distinguish the trust’s stated NAV return from inflation and from market-price returns, then check the exact period and calculation basis in any newer reporting. Until updated results and relevant details are available, whether Personal Assets Trust can regain ground against inflation remains an open question.

Key Questions

Did Personal Assets Trust lose value over the five years?

Not on the NAV measure cited by MoneyWeek: its NAV rose 20.8% to the end of August. The report says that rise was below the 27.5% cumulative CPI increase over the comparison period, so the return lagged inflation.

How did Personal Assets Trust compare with inflation?

MoneyWeek reports average UK CPI inflation of 5% a year, or 27.5% cumulatively, over the five-year period. Personal Assets Trust’s NAV increased 20.8%, equivalent to 3.85% annually according to the report.

Did Ruffer and Capital Gearing also lag inflation?

Yes, based on the figures in the report. Ruffer returned 20% and Capital Gearing 11.5% over the period, both below the cited cumulative CPI rise of 27.5%.

Can Personal Assets Trust recover its inflation-adjusted loss?

The figures provided do not establish whether it will. They describe historical performance; future returns and inflation will determine whether the trust regains purchasing power.

Source: rss