With the second wave of coronavirus building around the world, the chances of a second stock market crash are growing. As such, now could be a good time for investors to start considering their options. A market plunge later this year, or in 2021, is looking increasingly likely.
With that in mind, today, I’m going to take a look at one share I think could be the perfect investment for the next market decline.
Stock market crash investment
If you have £5,000, or any other amount to invest, it could be worth considering the Personal Assets Trust (LSE: PNL) for your portfolio. Now, strictly speaking, this isn’t a single share. It’s an investment trust which owns a basket of different assets.
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The structure might put some investors off, but I think it’s the trust’s most significant advantage. If you’re not put off by the structure, it may be worth considering this investment instead.
The single overriding aim of the trust’s management is to protect and grow shareholder capital over the long term. We only need to look back at the last stock market crash earlier this year see just how well management has been able to accomplish this aim.
In March and April, when the FTSE All-Share slumped by nearly 40%, shares in Personal Assets declined by just 10% before staging a healthy recovery.
Year-to-date, shares in the investment trust have risen by 6%, compared to a loss of 23% for the FTSE All-Share, excluding dividends. Put simply, the trust took the stock market crash in its stride.
Over the past five years, it has produced an even better performance. Since the beginning of October 2015, Personal Assets has outperformed the FTSE All-Share by 40% excluding dividends.
Defensive portfolio
Personal Assets’ goal to protect and grow shareholders’ capital has lead the business to operate a defensive portfolio. Around 50% of assets are invested in high-quality shares, companies like Microsoft. The rest of the portfolio is made up of high-quality bonds and precious metals.
This split between bonds, gold and growth stocks, helped the trust ride out this year’s stock market crash. It then benefited from the market recovery in the weeks after.
Thanks to its defensive positioning, I reckon it’s highly likely Personal Assets will be able to repeat this performance the next time around. And if there isn’t another market slump, then its allocation towards equities will help the trust benefit from the market rally.
The bottom line
All in all, if you’re looking to invest a lump sum in the stock market today, Personal Assets could be the best investment to buy now. The outlook for stocks and shares is highly uncertain, so the best way to invest in this market may be to adopt a conservative position. That’s precisely what Personal Assets has done.
As we have seen this year, the conservatives positioning should allow the firm to profit whatever the future holds for the stock market and investors around the world.
