ESG
and Policies

The Company’s objective is to preserve and over time to grow shareholders’ real wealth.

As preserving shareholders’ real wealth is core to the investment objective, greater emphasis is placed on avoiding loss than maximising returns. Achieving the investment objective implies returns at least in line with inflation over the short term and significantly ahead of inflation over the long term.

The Company does not have a formal benchmark but reports against the UK Retail Price Index (a measure of inflation) and the MSCI UK Equity Index. The Company does not have a target dividend payment. It is anticipated the capital return is likely to be the larger component of the returns.

The Investment Manager has the authority to invest in equities, bonds, commodities and cash. Equity investments are typically in listed collective investment vehicles, including investment trusts, ETFs, investment holding companies and property companies.

Asset allocation is flexible, and responds to changes in asset values and to the macro-economic environment. A broad mix of assets will be maintained, with a maximum equity exposure of 80% and a minimum of 20%. The Investment Manager has the authority to invest in any geographical region and has no set limits on industry sector or country exposure.

The Company will not invest more than 15% of its investment portfolio in any single security. The Investment Manager is not permitted to invest in derivatives (such as options, swaps or forward contracts) without prior Board approval. Investments in other funds managed by the investment manager also requires Board approval.

The Company has the authority to borrow up to 20% of net assets, subject to prior Board approval.

The shareholders of an investment trust own the assets held within the company. Notwithstanding this self evident statement, it is common for the share price of an investment trust to diverge meaningfully from the corresponding net asset value per share. For example if an investment trust has a net asset value per share of 100p but the share price was 80p, shareholders suffer a discount of 20% on selling.

In August 2015 the Board of Capital Gearing Trust instituted a discount and premium Control Policy (“DCP”). Under this policy the Company purchases or issues shares to ensure, in normal market conditions, that the share price trades as close as possible to the underlying net asset value per share. The operation of the DCP has been delegated to the Administrator.

The Company requires shareholder approvals to operate the DCP and will only issue or purchase shares when NAV enhancing and in accordance with legal, regulatory and listing rules. For more details please refer to the annual accounts.

CGAM have core principles that underpin their responsible investment practices and commitments. CGAM seek to be good stewards of the Company’s assets and believe their considered approach helps them make better investment decisions. CGAM is a signatory to the UN PRI.