(Update) Lord Rothschild is stepping down as chairman and director of RIT Capital Partners (RCP) to become president of the global investment trust he founded 31 years ago.
Sir James Leigh-Pemberton, a former RIT director who left to head UK Financial Investments, the government agency set up in the financial crisis to handle taxpayers’ stakes in bailed-out banks, has rejoined the investment company’s board to become Rothschild’s successor.
RIT shares, which had advanced 10% this year, shed 23p or 1% to £20.77.
Rothschild, 82, launched RIT in 1988 and has been instrumental in growing its assets from £280 million to around £3 billion by exploiting his contacts with leading investors around the world. He said he was delighted to become president and maintain his ‘ongoing and active involvement’ with the company.
He said there were no plans for the Rothschild banking dynasty to reduce its 21% stake in the investment trust whose defensive and diversified portfolio has become increasingly popular with private investors.
‘Today I reaffirm my family ties with RIT – we shall remain committed, engaged and significant RIT shareholders in the years ahead,’ he said.
Leigh-Pemberton, an investment banker who started his career at Warburgs before becoming chief executive of Credit Suisse, previously served on RIT’s board for nine years until 2013.
He said: ‘It is a great honour to be invited by the board to serve as chairman of RIT Capital Partners. I came to know the company well during my previous service as a director and I am delighted to return.’
Rothschild told shareholders at RIT’s annual general meeting in London today that succession planning had been underway for several years as he stepped back from day-to-day management of the multi-asset portfolio, whose investments span companies both on and off the stock market alongside an array of holdings in specialist credit and hedge funds.
An executive committee at RIT’s investment manager, J Rothschild Capital Management, had been formed and Ron Tabbouche made chief investment officer of JRCM following the departure of Micky Breuer-Weil, its previous long-standing investment director, in 2012.
The appointment of Francesco Goedhuis as JRCM chief executive in 2014 had also been important, while RIT’s board had also been strengthened, Rothschild said, by the appointment of new directors, including his daughter Hannah.
Rothschild added: ‘I have known James for two decades and more – in that time he has shown himself to be a man of integrity, decency and vison. All attributes which, together with his extensive experience of financial markets and outstanding reputation, will serve him well as chairman of RIT. I couldn't wish for a better person to chair our company.’
Leigh-Pemberton praised Rothschild for his leadership over the decades. ‘His drive, vison and strong values have helped make RIT one of this country's most admired investment companies’, he said.
He reassured shareholders there would be no change in RIT’s approach. ‘I am committed to maintaining the distinctive way of doing things at RIT, in particular our focus on prudent investment management for the long term and placing shareholder value at the heart of all we do,’ he stated.
Over the years, RIT has taken pride in its absolute return approach of capturing around three quarters of the upside in rising markets while suffering only 39% of their declines. Last year its net asset value (NAV) edged 0.8% higher, shielding investors from the 5.8% fall in its equity benchmark, the MSCI All Country World (ACWI) index.
Shareholders have become accustomed to Lord Rothschild's grave observations on geopolitical and market risks. Earlier this year in a typical intervention in RIT's annual report, he warned the UK faced its worst political crisis since Suez in Brexit.
According to the company, someone who bought £10,000 in RIT shares at launch in 1988 and reinvested the dividends back into the shares would have had a stake worth £326,000 by the end of last year. This equated to an annual total return of 12.1%, well ahead of the 6.7% achieved by the MSCI index, which would have turned the same investment into £73,000.
However, after recovering from a dull patch earlier this decade, its 10-year returns are no longer as impressive as the 30-year statistics. Over 10 years the underlying NAV total return of 157.7% lags the 229% of the MSCI ACWI, although shareholder returns have been slightly better at nearly 167%, according to Numis Securities data.
Investors have not appeared to mind with the shares currently trading 8% above NAV, their average premium of the past 12 months, though one that leaves them looking rather expensive, according to analysts at Stifel.
Charles Cade of Numis Securities, a corporate broker to RIT, who has rated it a ‘core’ holding for four years, agreed the premium rating was a ‘drawback’ for new investors but added.
‘However, we would regard any significant price weakness resulting from the announcement of Lord Rothschild’s new role as a buying opportunity.’