We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Skip to main content
  • Register
  • Help
  • Contact us

Capital Gearing Trust: October 2022 update

In this investment trust update, Senior Investment Analyst Hal Cook shares our analysis on the manager, process, culture, ESG integration, cost and performance of Capital Gearing Trust.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

  • The trust aims to deliver long-term growth with a focus on preserving wealth in weaker markets
  • Manager Peter Spiller has been running the trust since 1982 and more recently Alastair Laing and Chris Clothier have been appointed as co-managers
  • The team have a strong track record of providing long-term investment returns with lower volatility than shares

How it fits in a portfolio

Rather than trying to shoot the lights out, Capital Gearing Trust’s primary aim is to preserve investors’ capital. While there is no formal benchmark for the trust, the manager tries to grow investors' money by more than inflation over the long run. He defines inflation as the Retail Prices Index (RPI) and long-run means more than 5 years.

As a result, it could form the foundation of a broad investment portfolio, bring some stability to a more adventurous portfolio, or provide some long-term growth potential to a more conservative portfolio.


Peter Spiller took over management of Capital Gearing Trust in 1982. He's since managed the trust using broadly the same investment philosophy throughout his tenure. He set up Capital Gearing Asset Management in 2001, having previously worked as a strategy director at Cazenove & Co Capital Management. He’s also Chief Investment Officer at Capital Gearing Asset Management.

Spiller is supported by two co-managers in Alastair Laing and Chris Clothier. Laing joined the team in 2011 and is also Chief Executive Officer at Capital Gearing Asset Management. Clothier joined in 2015 is also Chief Financial Officer for the business.

The three managers bring different experiences to the table in managing the trust, which helps the team find suitable investment ideas. Another reason for hiring Laing and Clothier was succession planning for the trust and the firm. The managers are supported by a small team that help with investment ideas as well as more administrative tasks.

While the company is run by a small team, we think they are suitably resourced to run the handful of strategies currently on offer.


Spiller likes to keep things simple. He aims to shelter investors' wealth just as much as growing it. To do this, the trust is constructed around three ‘buckets’ of assets: Dry Powder, Risk Assets and Index Linked Bonds. The Dry Powder bucket is made up of cash, treasury bills and short dated bonds. The purpose of this section of the trust is to hold its value during volatile times or when shares and bonds are going down in price.

The Risk Assets section is mainly invested in shares. The team don’t invest in companies directly, instead they choose to invest in other trusts or funds. This gives them access to some specialist investments and also means that the trust is invested in lots of shares in small proportions. This section of the trust is there to provide investment returns over the long-term.

Index Linked Bonds are the third bucket and the managers usually invest in US Treasury Inflation Protected Securities (TIPS) or UK Index-Linked Gilts. The purpose of this part of the trust is to provide some inflation shelter and for it to perform better when markets are under stress.

The amount invested in these buckets changes over time, depending on how the team feel about markets and where they see opportunities.

Investors in the trust should be aware that closed-ended funds can trade at a discount or premium to the net asset value (NAV). Unlike many other trusts, the manager looks to limit the size of the discount or premium to the net asset value (NAV).

During 2022, the managers have been reducing the amount invested in their risk assets bucket. They had around 44% invested there in March 2022 and have nearer 37% in that section as of the end of September 2022. They have increased their allocation to index linked bonds over the same period, with the dry powder section of the trust staying at a similar size. Within the risk assets section, the team have reduced their allocation to Real Estate Investment Trusts (REITs) over concerns about a potential recession and fears that this may impact property prices.

The manager has the flexibility to use derivatives and gearing (borrowing to invest) which, if used, adds risk. However, the manager has not used gearing in the past and has stated he has no intention to do so in future.


We like that Capital Gearing’s managers are dedicated to the same investment philosophy that was established a long time ago. The group has always been clear about the way its range of funds are managed, and the managers don't stray into overly complicated areas of investment markets. Wealth preservation is key, and each manager adheres to this mantra.

Capital Gearing Asset Management is owned by its employees, via an employee ownership trust. The managers also invest in the company’s strategies. Both of these factors mean that the trust managers are incentivised to perform well for investors and the company is proud that all of the asset managers they have ever employed remain in the business.

ESG Integration

All of Capital Gearing’s funds are run with a medium to long-term investment horizon in mind, with a focus on capital preservation. So, assessing whether society will support the business model over the long term, and whether management will act as good stewards of shareholders’ capital is an important part of the investment process.

The team at Capital Gearing is small and they do not have the resource that many larger firms do to consider ESG matters. That being said, they support the UK Stewardship Code and do consider ESG factors when looking at what assets to invest in. Overall though, the return profile is the most important thing and they will invest in assets that are not very ESG friendly if they assess an opportunity as having an attractive risk and reward profile.


The trust's ongoing charge for the year to 31 March 2022 was 0.78%. Investors should refer to the latest annual reports and accounts and Key Investor Information for details of the risks and charging structure.

If held in a SIPP or ISA the HL platform fee of 0.45% (capped at £200 for a SIPP and £45 for an ISA) per annum also applies. Our platform fee doesn’t apply if held in a Fund and Share Account.


Since Spiller created Capital Gearing Asset Management in 2001, the trust has grown 404.2%*, which we think is an attractive return for a more conservative trust. This return is well ahead of the UK Retail Prices index of inflation and the FTSE All Share index, which have grown by 99.4% and 176.4% respectively over the same period. Remember past performance isn't a guide to future returns.

The trust has lagged the FTSE All Share and RPI over the last 12 months though. Their risk assets bucket has hurt performance, with investments in REITs performing particularly poorly, especially in the third quarter of 2022. Their holdings in power and energy have added to returns though, as have their index-linked bond holdings. While these assets have performed more strongly, they have not offset the losses from REITs noted above.

At the time of writing the trust trades at a premium of 2.15%. All investments and any income they produce can fall as well as rise in value, so investors could get back less than they invest.

Annual percentage growth
Sept 17 – Sept 18 Sept 18 – Sept 19 Sept 19 – Sept 20 Sept 20 – Sept 21 Sept 21 – Sept 22
Capital Gearing Trust 4.63% 7.22% 4.90% 12.51% -5.19%
FTSE All-Share 5.87% 2.68% -16.59% 27.89% -4.00%
UK Retail Price Index 3.27% 2.43% 1.13% 4.86% 11.86%

Past performance is not a guide to the future. Source: *Lipper IM to 30/09/2022.



Want our latest research sent direct to your inbox?

Our expert research team provide regular updates on a range of investment trusts.

Please correct the following errors before you continue:

    Existing client? Please log in to your account to automatically fill in the details below.

    This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.


    Your postcode ends:

    Not your postcode? Enter your full address.


    Hargreaves Lansdown PLC group companies will usually send you further information by post and/or email about our products and services. If you would prefer not to receive this, please do let us know. We will not sell or trade your personal data.

    Our investment trust research is for investors who understand the risks of investing and that investing in investment trusts isn't right for everyone. Investors should only invest if the trust's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of an investment trust before they invest, and make sure any new investment forms part of a diversified portfolio.

    What did you think of this article?

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

    Editor's choice – our weekly email

    Sign up to receive the week's top investment stories from Hargreaves Lansdown. Including:

    • Latest comment on economies and markets
    • Expert investment research
    • Financial planning tips
    Sign up

    Related articles

    Category: Markets

    Next week on the stock market

    What to expect from a selection of FTSE 100, FTSE 250 and selected other companies reporting next week.

    Aarin Chiekrie

    01 Dec 2023 4 min read

    Category: Shares

    Autumn statement 2023 – NatWest retail share offer

    The UK government could sell its NatWest shares to the public by the end of 2026. We look at how this could work and how you can stay up to date.

    Jason Roberts

    29 Nov 2023 4 min read

    Category: Autumn statement 2023

    Autumn statement top stock market takeaways

    Tax cuts, alcohol and tobacco duty changes, and housebuilding funding, what impact do we see this having on investing?

    Derren Nathan

    28 Nov 2023 5 min read

    Category: Shares

    abrdn Asia Focus investment trust: November 2023 update

    In this update, Investment Analyst Henry Ince shares our analysis on the manager, process, culture, ESG integration, cost, and performance of the abrdn Asia Focus investment trust.

    Henry Ince

    27 Nov 2023 7 min read