Lord Rothschild, head of the banking dynasty, today warned that shares, bonds and other investments are overpriced, blaming central banks pumping money into financial markets.
“Almost every asset class is highly priced by historical standards at a time when the precarious geo-political situation in the Middle East and Russia could undermine the fragile economic recovery which central bank policy has helped bring about,” said Rothschild, chairman of the £2 billion RIT Capital investment fund. “We have become uncomfortable in participating in liquidity fuelled markets.”
The 78-year-old father of financier Nat Rothschild issued the warning as RIT Capital’s net asset value reached an all-time high of 1401p per share at the end of June. The total value of its assets were up £27 million to £2.173 billion, despite the strength of the pound.
He added: “A challenge in the period under review has been currency allocation.
“We increased our sterling exposure to a level higher than at any time in recent history; however, its appreciation since the start of the year has affected your company’s [net asset value] given the global nature of our investments.
"Mindful of the Bank of England’s continued hawkish stance, we will maintain our relatively high level of exposure to sterling, a portion of which is held through options as we see risks ahead which may cause the currency’s upward trend to reverse.”
RIT raised its dividend 5% to 29.4p. There was also a promotion for Francesco Goedhuis, head of special situations, who was named chief executive of subsidiary J Rothschild Capital Management.
The company’s board includes some of the City’s best-known names such as Mike Wilson, who founded wealth manager St James’s Place with Lord Rothschild.
