'Super bear' has got it off Pat

Published on Friday 3 July 2009 21:26

PERSONAL Assets Trust, the "super bear" investment trust that sold its shareholdings and went almost totally liquid last year, is now heavily reinvested in equities.

The Edinburgh-based trust, which built up a strong following under the stewardship of the iconoclastic Ian Rushbrook, has now reinvested 70 per cent of its fund in equities. But it is still 24 per cent liquid, which is high for the industry, and has 6 per cent of the fund in gold.

Writing in the annual report, Sebastian Lyon, the new investment manager brought in after the sudden death of Rushbrook last year, maintains the tradition of outspokenness.

He says the financial crisis did not hit "despite the actions of policymakers. It hit because of them. Alan Greenspan's decision to keep interest rates too low for too long and Gordon Brown's woeful management of the public finances, combined with abysmal financial regulation, were all avoidable.

"Policy-makers have, until recently, been behind the curve. They have now thrown not only the kitchen sink at the problems, but the kitchen too.

"We live in a world of dishonest money… The seeds have been sown for much higher prices. Government bonds, once described as offering risk-free returns, now offer 'return-free risk'. A year ago, Ian identified the credit crisis as the combined threats to the world economy of 'fire and ice' (inflation and recession]. The ice has arrived, but the fire is still to come."

Chairman Robert White is to stand down. He will be succeeded by Hamish Buchan.