Long-Term Case Study: RIT Capital Partners (RCP), 2014-2026
HOW OUR VIEW HAS EVOLVED
Our starting point here is that Investment Trust Newsletter is not really about providing one-off ‘hot tips’ – we prefer to provide continuous long-term coverage of trusts, learning about their strategy and processes more deeply over time, watching them and engaging with them as they evolve and our views evolve along with them. Of course we will change our opinions over time. This case study of RIT Capital Partners, covering a twelve-year period, illustrates exactly how an investment case can play out over time.
One of the benefits of covering investment trusts month after month is that a good company does not necessarily make a good investment at every price. RIT Capital Partners (RCP, 2502.5p) illustrates that particularly well. We have followed the trust for many years, recommending it when we thought the combination of portfolio quality and valuation was attractive, becoming more cautious when its premium became excessive, and returning much more positively when poor performance and concerns about private assets eventually pushed the shares onto an unusually wide discount.
Our relationship with RIT stretches back well over a decade. We selected the trust as our growth ISA recommendation in March 2014 at 1293p. A year later, in March 2015, the shares had risen to 1531p, a gain of 18.4%, comfortably ahead of the relevant indices. We were pleased not simply with the return but with how it had been achieved. RIT's diversified approach had allowed it to participate in rising markets without assuming the full risk of a conventional equity portfolio, which was exactly what we had wanted from the recommendation.
We therefore reiterated our recommendation in March 2015, saying that we had been “very impressed with its performance” and particularly admired its ability to generate decent returns with comparatively low risk. The trust was investing in areas that were difficult for private investors to access directly, including specialist credit, private companies and alternative strategies. The attraction was not simply maximising returns in a bull market, but capturing a good proportion of the upside while providing some protection when markets went the other way.
That remained our broad view over the following years. By January 2016, at 1650p, we described RIT as the leader of the Flexible Investment sector, pointing to its positive return over the previous year and first-place ranking amongst its peers over three and five years. The diversification, flexible asset allocation and defensive qualities continued to make the trust particularly useful as a long-term portfolio holding.
But our enthusiasm for the underlying trust did not mean we were prepared to ignore its valuation. By 2017, at 1948p, RIT had become increasingly highly rated. We wrote that we had “long liked” the trust but were “not at all sure it can either justify or maintain” a 10.3% premium to NAV. That distinction is important. We had not suddenly lost confidence in RIT's investment approach; rather, the market price had moved far enough ahead of the underlying assets that the risk/reward equation was becoming less attractive.
The same issue became still more obvious in December 2019, at 2172.5p. Its premium had reached 12%, compared with a 12-month average of 8.1%. Our conclusion was straightforward: “We like the trust, but its recent track record is fairly average in the sector, and we think a rating closer to par would be more sensible.” In other words, this was a trust we continued to respect, but not one we wanted readers to chase at almost any valuation.
That caution proved useful when markets were subsequently thrown into turmoil by Covid. By April 2020, the valuation had swung dramatically in the opposite direction and RIT was trading on a 10.9% discount. We highlighted this as a possible opportunity for investors wanting to start putting money back into markets without taking full equity-market exposure. At the time, only around 35% of the portfolio was in long equities, with the remainder spread across hedge funds, absolute-return and credit strategies, private investments and real assets. RIT's historic record of participating in much more of the market upside than the downside suddenly looked particularly relevant.
The next stage of the story was less comfortable. RIT's performance deteriorated during 2022 and 2023, while its substantial allocation to private investments became a particular source of market concern. Higher interest rates undermined the valuations of long-duration growth assets and investors became increasingly suspicious of private-company NAVs across the investment trust sector. RIT's reputation for defensive wealth preservation was also dented by two disappointing years.
The result was a profound change in the rating. A trust that had traded at substantial premiums only a few years earlier moved onto a double-digit discount. In October 2022, at 2047.5p, for example, we highlighted RIT's 16.6% discount as one of a number of unusually wide valuations created by the market sell-off.
We did not immediately interpret the falling price as a buy signal, though. There was a genuine question to answer about whether the deterioration represented merely a difficult investment cycle or something more fundamental. Lord Jacob Rothschild had retired from the business in 2019, the trust's increased emphasis on private markets was being questioned, and the performance record had deteriorated. These were issues that needed monitoring rather than simply dismissing because the shares looked cheap.
That process of reassessment became particularly important in 2024. By December 2024, at 1911p, the discount had blown out to 26.5%, compared with an average of 27% over the preceding year. This was an extraordinary reversal from the premium ratings of 2015–19.
We spoke to the refreshed management team, including new chief executive Maggie Fanari, and began to see reasons for greater optimism. The trust was trying to improve its communication and transparency, its public equity performance had improved, and the managers argued persuasively that private investments remained a genuine source of differentiated long-term returns rather than simply a problem to be eliminated. RIT had also started buying back its own shares.
Our conclusion at that stage was that the market had probably gone too far. We wrote that the trust looked “oversold”, and that there was “good embedded value that should reward patient investors over time.” Importantly, though, we were still watching for evidence that the new management arrangements and investment process were working.
By early 2026, we thought that evidence had arrived. The 2025 results showed a 13.5% NAV total return, while the portfolio had been repositioned significantly. RIT had reduced its exposure to the US and the mega-cap stocks that had dominated markets, moving capital towards Japan, emerging markets, Europe and biotechnology. The private portfolio was also starting to provide more realisations and contained highly attractive holdings including SpaceX, Anthropic and Databricks. Some recent funding rounds at higher valuations had not yet been incorporated into the reported NAV, creating the possibility of further uplifts.
At the same time, the valuation had scarcely responded. In March 2026, at 2160p, the discount was still 27.5%. That combination prompted the major change in our stance. We selected RIT Capital Partners as one of our 2026 ISA recommendations at 2160p. We argued that the trust retained the qualities of a family office, with an emphasis on resilience and diversification, but that investors were now being offered those qualities at a valuation very different from the premiums they had previously been asked to pay.
There were three particularly important elements to our reasoning. First, the portfolio was deliberately constructed to generate equity-like long-term returns with less risk, combining quoted equities, private investments and genuinely uncorrelated strategies. Secondly, the much-criticised private portfolio was starting to look more like an asset than a liability as the environment for IPOs and realisations improved. Thirdly, the 27.5% discount offered substantial scope for an additional return if confidence recovered, with buybacks providing further support.
We followed up quickly. By May 2026, at 2190p, we spoke again to Frank Ducomble. He emphasised the access RIT's longstanding network provides to private companies such as SpaceX, ByteDance, Anthropic, Stripe and Shein. We also noted that private-company valuations are only formally updated periodically, meaning rising valuations can take time to appear in NAV. Intriguingly, despite this increasingly positive backdrop, the discount had actually widened slightly to 27.9%. We thought there was a good chance of that narrowing over time and continued to rate the shares a BUY.
The subsequent progress has been encouraging. By September 2026, at 2502.5p, including the dividend, our March ISA selection had generated a return of 16.9% in around six months.
More importantly, the underlying investment case had continued to develop. RIT produced a 9.0% NAV total return in the first half of 2026, taking NAV per share to an all-time high. All three portfolio pillars contributed positively. The private portfolio returned 9.1%, while the trust benefited from SpaceX and increased its exposure to Anthropic and Databricks. There had also been encouraging realisations, achieved at an average 44% uplift to carrying values, with more than 43% of the private portfolio realised over the previous two years.
The discount had narrowed to 20.9%, helped by performance, greater engagement with shareholders and substantial capital returns. RIT had completed a £300m tender offer and, including buybacks, had repurchased more than 20% of its equity over three years.
We therefore reiterated our recommendation to buy, concluding that RIT had done a very good job of changing perceptions under the refreshed management team and could serve as a CORE HOLDING for investors seeking a diversified portfolio.
There is a useful lesson in the history. We recommended RIT for an ISA at 1293p in March 2014 and reiterated the recommendation a year later at 1531p. As the rating became increasingly expensive, however, we became more cautious: at 1948p in 2017 we questioned a 10.3% premium, and at 2172.5p in December 2019 explicitly said the 12% premium looked too rich. When that premium eventually turned into a very large discount we did not automatically call it cheap, but followed the deterioration in performance, the concerns over private assets and the management changes until we thought the evidence justified becoming more positive again.
That point arrived decisively in March 2026 at 2160p, when we made RIT an ISA recommendation on a 27.5% discount. Six months later, at 2502.5p, the shares had already produced a 16.9% total return, but our September review again went back to the underlying portfolio and valuation before reiterating the recommendation.
That, ultimately, is the purpose of regular coverage. The RIT we recommended at 1293p in 2014 subsequently became too expensive; the same trust then suffered genuine investment problems and became deeply unpopular; management changed, the portfolio evolved and the valuation moved from a double-digit premium to a discount approaching 30%. Our advice changed as those facts changed. A good investment trust can become too expensive to buy, just as a disappointing one can eventually become sufficiently cheap — and sufficiently improved — to offer an opportunity again.
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