Wealth Preserver Portfolio Review: The Impact of Investment Trusts


More than two years have passed since the inception of our Wealth Preserver portfolio, making it an opportune moment to evaluate its performance. Regrettably, the results have been less than stellar, with current paper losses edging into the double digits.

Portfolio Performance Overview

Let’s begin by providing a brief overview of how the different segments of our portfolio have fared:

Rising Assets:

  1. Scarcity Assets: Gold and Bitcoin have collectively gained 4.8%.
  2. Bond/Debt Funds: These have seen a 1.7% increase in aggregate.
  3. Commodities: Showing a positive trend, with an 11.4% increase.
  4. Cash: Providing stability and growth.

Declining Assets:

  1. Index-Linked Gilts: A significant decline of 23% since purchase.
  2. Individual Stocks: Our second-worst performers, with a loss of 21.5%.
  3. Property/Infrastructure Funds: 20.8% in the red.
  4. Uncorrelated Assets: A 13% decrease.

Overall, the portfolio has suffered a 10.4% decline.

Identifying the Main Contributor

While we cannot attribute all the losses to a single mistake, one factor stands out as a significant contributor – our reliance on investment trusts.

This revelation may come as a surprise to our readers, given our historical endorsement of these quoted funds as excellent long-term savings vehicles. However, we must acknowledge their role in the portfolio’s underperformance.

The Role of Investment Trusts

The primary reason behind this underperformance is straightforward: since their purchase, the discounts on many of our trusts have widened significantly. To illustrate, when we acquired them, our 11 trusts (excluding Pollen Street) were trading at or near par value. Presently, they trade at an average discount of 25.2%.

For instance, Hipgnosis Songs Fund, initially bought at a 2% premium, now trades at a staggering discount of 47.7%. Similarly, Urban Logistics Reit has transitioned from a 15.9% premium to a 28.9% discount.

Net Asset Value Perspective

Despite their poor share price performance, examining their net asset value (NAV) reveals a different picture. Hipgnosis, for example, with a dramatically widened discount, has seen its NAV increase by 18.3% since purchase, even though the share price reflects a 35.7% loss. Urban Logistics Reit, down by a third in share price terms, has experienced an 8% NAV increase.

In fact, if all 11 trusts were trading at the discount or premium at which we acquired them, the Wealth Preserver portfolio as a whole would show a 2.7% gain, though still below our target of outpacing inflation.

A Note of Caution

It’s important to note that the encouraging NAV figures do not alleviate all concerns. Readers cannot sell these trusts at their NAV, only at prevailing market share prices. Nevertheless, there is potential for the significant discount widening to reverse.

Understanding the Causes

Several factors contributed to this widening of discounts. Many of our trusts serve as income vehicles, which became less appealing as interest rates rose considerably. Additionally, some specialized trusts may have been impacted by increased investor risk aversion.


While the performance of our trusts and individual shares has been lackluster, it appears that neither category has suffered permanent capital losses, only market price volatility. As we move forward, we will maintain our position, closely monitoring the market’s ebb and flow.

Calculations based on Wednesday’s closing prices.

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