A Steady Hand in Stormy Seas
Personal Assets Trust (PAT) has navigated another year of geopolitical turbulence and market swings with characteristic poise, delivering a 7.5% NAV total return for FY2025. In a world where volatility became the default setting, this performance – matching the FTSE All-Share Index while deploying a radically different strategy – speaks volumes about PAT’s disciplined approach to capital preservation.
Defence as the Best Offence
While headline returns aligned with the UK market, PAT’s playbook couldn’t be more distinct. The trust’s 63.3% liquidity buffer acted as both shield and strategic reserve:
- Gold’s Glitter (10.8% allocation): Bullion proved its worth as the “ultimate reserve asset,” countering paper currency depreciation and geopolitical stress.
- Inflation Armoury: US TIPS (26.7%) and index-linked bonds delivered meaningful income as inflation persisted.
- Equity Selectivity: Just 36.7% equity exposure – concentrated in quality names like Visa, Unilever, and American Express.
This structure proved its mettle in April’s “Liberation Day” market plunge. While global indices tumbled nearly 10%, PAT’s NAV dipped a mere 1.9%. As co-managers Sebastian Lyon and Charlotte Yonge note: “Shareholders cannot spend relative pounds.” Absolute returns with minimized drawdowns remain the mission.
Portfolio Pivots: Selling Turnarounds, Buying Moats
Unusually active by their standards, PAT made decisive moves:
- Exits: Sold Procter & Gamble after a successful 9-year hold (“less resilient” growth) and Becton Dickinson (operational challenges).
- New Entrants: Added Canadian National Railway (North American rail monopoly), Chubb (bond yield beneficiary), and VeriSign (pricing power in domain registry).
- Opportunistic Buys: Scooped up LVMH and L’Oréal during April’s tariff-induced selloff.
Notably, they reduced dollar exposure (“may prove a lasting change”) favouring yen as a safer haven, while trimming gold into strength to maintain 10-12% weighting.
The Discount Control Machine Purrs
PAT’s commitment to trading near NAV remains non-negotiable. The year saw £126m net outflow from buying back 26.1m shares and issuing 0.6m – surgical strikes against discount volatility. Since 1999, this mechanism has spared shareholders the painful discounts plaguing many trusts. The share price’s 5.8% rise (outpacing the FTSE All-Share’s 3.7%) underscores its effectiveness.
Income Surprise in an Inflationary World
Persistent US inflation delivered an unexpected silver lining: bumper income from TIPS prompted a special dividend of 1.60p alongside the maintained 5.60p annual payout. The trust’s income flexibility – prioritising capital protection while sharing unexpected bounty – remains a structural advantage.
Stable Ship, Evolving Crew
Ongoing charges edged up to 0.67% (from 0.65%), still below the 0.89% of 2013. Management stability continues with Charlotte Yonge’s promotion to co-manager – a decade-long Troy veteran deepening the succession plan. Board refreshment sees Sharon Brown replacing Jean Sharp as Audit Chair.
Risks: The Known Unknowns
The Board flags heightened economic and geopolitical risks – from Trumpian tariffs to defence spending surges. Yet PAT’s defences seem calibrated for this environment:
- Low equity beta and bond duration
- Material liquidity for future opportunities
- Diversification across non-correlated assets
The Verdict
In a world obsessed with “ABUSA” (Anything But USA), PAT refuses fashion-driven reactions. Their 7.5% return wasn’t flashy, but it was achieved with roughly half the market’s volatility. As Lyon and Yonge put it: “We are not convinced life is so simple.”
For investors seeking a lifeboat with an engine – capital preservation and real growth – PAT’s consistent navigation through chaos remains compelling. The 25-year track record of 8.6% annualised NAV returns (versus 3.5% RPI) speaks louder than any single year’s figures. In 2025’s storm, this trust proved again why “boring” can be beautiful.
