This looks to be the offending/opportunist article. Note the bolding of the "Crypto exposure" headline makes the article a bit fishy in my opinion:
https://www.theaic.co.uk...on-private-market-risks
"Investec analyst Alan Brierley cuts rating on £3.5bn Rothschild-backed multi-asset fund claiming there has been a ‘material increase in the risk profile’.
Investec has taken the bold step of downgrading its rating of RIT Capital Partners (RCP ), fearful the popular £3.5bn Rothschild family backed multi-asset fund is no longer the balanced, lower-risk investment it once was.
Reducing RCP from ‘buy’ to ‘hold’, analyst Alan Brierley said he had also removed RCP from Investec’s Flexible Model Portfolio, of which it has been a constituent since 2008. He said there had been a ‘material increase in the risk profile in the past couple of years’ with the amount allocated to private market equities and funds nearly doubling to 45% from 24.2% two years ago.
RCP shares, which had already fallen 16% this year to a wide 11% discount to net asset value (NAV), fell a further 3.2% to £21.92 in response.
Crypto exposure‘Critically, while traditionally this portfolio has been balanced, there is now a significant tilt towards what we regard as higher risk venture capital, including around 4% in blockchain/crypto,’ he wrote in a note to investors.
‘Although RCP does not disclose its full portfolio, on 30 June the disclosed venture capital fund exposure alone was 18.5% of NAV versus 1% just seven years earlier,’ Brierley said.
The analyst believed this was behind a sharp increase in its already high annual costs which stand at 5.4%, up from 4.7% before, according to its key information document. The company points out its underlying investment returns as measured by the NAV are after all costs.
Previously, while ‘acutely mindful’ of RCP’s costs, Brierley believed they were justified to access a fund that claims to have participated in 74% of stock market growth while limiting exposure to its declines to 38%.
However, like other investors this year, Brierley has become concerned about the ‘apparent disconnect’ between some later-stage venture capital valuations, which have not fallen nearly as much as quoted growth stocks on public markets.
The analyst estimates RCP’s private portfolio was marked down about 5% in the first half of this year after big gains in 2021. By contrast, the Goldman Sachs Non-Profitable Tech index, a benchmark for speculative growth company startups, had plunged 47%.
‘Ultimately though, there will be price discovery, and for many of the companies in this sector, this will be painful,’ Brierley (below) added.
In August RCP reported a half-year NAV loss of 8.8%, beating the 14.7% decline in the MSCI All-Country World index, after fund managers Francesco Goedhuis and Ron Tabbouche cut equity exposure to 38% from 43% in December.
In October, after the extreme stock and bond volatility around the now notorious Kwasi Kwarteng ‘mini’-Budget, RCP said it had again proved its defensive value with a 2.3% NAV decline compared with the 7.1% drop in the MSCI All Country.
It admitted, however, that there had been some ‘value compression’ this year in the private investments segment that had powered returns in recent years. Due to the long reporting cycles, its private equity funds were only valued at 30 June. Meanwhile, its direct investments in unquoted companies are valued on a six-monthly rolling cycle by its independent valuation committee, it said.
Overall it has been a tough year for the closed-end fund. According to the company’s factsheet at the end of October, RCP’s underlying NAV had fallen 12.1% this year, in line with the 12.5% drop in the MSCI All Country. Over five years, it beat the index with a total investment return of 44.8% ahead of 39% from the MSCI benchmark."