RIT Capital Partners recently published their half-yearly report for 2018. You can read it here. The report provides a general update on their current thoughts and views, insights about existing holdings and changes to the portfolio over the period.

The chairman’s statement, written by Lord Rothschild, is also worth a read (pages 2-3 of the report). The letters have become increasingly cautious in tone in recent years. Some highlights and quotes from the latest letter below:

• Positioning: “We continue to believe that this is not an appropriate time to add to risk. Current stock market valuations remain high by historical standards, inflated by years of low interest rates and the policy of quantitative easing which is now coming to an end. The cycle is [now] in its tenth positive year, the longest on record.”
• Risks: “We are now seeing some areas of weaker growth emerge; indeed the IMF has recently predicted some slowdown. The problems confronting the Eurozone are of concern – both political and economic – given the potentially destructive levels of debt in a number of countries. The likelihood of trade wars has increased tension and the impact on equities has been marked, for example by early July the Shanghai Composite Index had dropped some 22% from its peak in January. Problems are likely to continue in emerging markets, compounded by rising interest rates and the US Fed’s monetary policy which has drained global dollar liquidity. We have already seen the impact on the Turkish and Argentinian currencies. We remain concerned about geo-political problems including Brexit, North Korea and the Middle East, at a time when populism is spreading globally.”
• A less cooperative world: “The resolution of [the above] problems in this unpredictable era will surely be difficult. In 9/11 and in the 2008 financial crisis, the powers of the world worked together with a common approach. Co-operation today is proving much more difficult. This puts at risk the post-war economic and security order.”
• Outlook: “In the circumstances our policy is to maintain our limited exposure to quoted equities and to enter into new commitments with great caution. Doubtless there will be opportunities in stock selection and through identifying gifted investment managers with specialised skills. In this context we are conscious of the economic potential in Asia, notably China, as well as the advances in innovation and technology.”