Fund Profile

Ruffer Investment Company 06 March 2024

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Ruffer Investment Company. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

Ruffer Investment Company (RICA) is intended to deliver positive returns in all market environments, most importantly protecting against loss of capital when equities and bonds are losing money. Over the long run, the trust has a good track record of achieving this (see Performance). However, following an outstanding 2022 for the trust, during which it made positive returns as equity and bond markets fell, 2023 was a disappointing year as a number of positions didn’t work as expected.

The strategy is to use a broad variety of assets to build a portfolio with multiple drivers of returns which should do well in different scenarios. This means adjusting asset allocation based on what the management team at Ruffer view as the main risks. Currently, the team believe we are entering into a new regime for financial markets in which high and volatile inflation is the core risk to capital. This drives a large position in inflation-linked bonds, as well as a position in gold, industrial commodities and their producers. Last year these positions didn’t pay off, as we discuss in the Portfolio section, but managers Duncan MacInnes and Jasmine Yeo argue that this is largely because markets have become complacent about the outlook for interest rates and inflation, with serious risks of losses in equity and bond markets remaining.

The success of the trust over the years has seen RICA trade on a premium for long periods. However, in 2023, as the market has become less concerned about inflation, a Discount has opened up in the shares and the board has initiated buy-backs.

Kepler View

Duncan and Jasmine are clearly disappointed with how 2023 worked out. In a period of high inflation, RICA lost money, and many investors who thought of the trust as an inflation hedge will have been wondering why. One reason is that while current inflation was high, long-term inflation expectations remained fairly anchored, as markets came increasingly to the view that the recent inflation was likely to subside quickly and recession maybe avoided. RICA had positions in long-dated index-linkers, and as a result did not benefit. Meanwhile gold and commodities all performed as if inflation was likely to subside too, and the protection strategies cost money as bond and equity markets performed.

However, we would make two points to put this year in context. First, equities and bonds both made good returns. It is disappointing that RICA wasn’t at least flat, as it has been in other good years for risk assets, but we don’t think this is the environment that the trust is typically most helpful in. Secondly, it was 2022 in which we saw the real inflation surge and RICA did indeed perform very well, while its peers following similar strategies lost money alongside equity and bond markets. Overall, RICA has performed in line with equity markets over the past two years but generated positive performance in much of the period when equities were losing money. In our view this is creditable and speaks to the benefit of holding RICA in a portfolio.

RICA remains a valuable hedge against central banks not being able to engineer a ‘soft landing’. We think Duncan and Jasmine are right in their view that markets are now pricing in an incredible escape from the inflationary environment of the past few years. As a result, a typical equity and bond portfolio could be dangerously exposed if this outcome doesn’t emerge, and RICA could provide valuable protection once more.

Bull

  • Strong track record of making good returns while limiting drawdowns, especially in crises
  • Well-positioned for an inflationary environment, in contrast to many other strategies
  • Current discount may offer a rare opportunity

Bear

  • Long-term and contrarian approach can lead to periods of sluggish performance
  • Could suffer if central economic theses are proven wrong – i.e. inflation falls, remains low and stable and/or real rates stay positive
  • Positions can be complex and hard for investors to understand
Continue to Portfolio

Fund History

29 Oct 2024 Fund Analysis
RICA’s strong performance in the summer crash could bode well…
09 Oct 2024 Going, going, gold!
We ask if gold can continue to rise from all-time highs…
12 Jun 2024 How do you like them apples?
We do our best to categorise the trusts in the Flexible sector, many of which share little common ground...
06 Mar 2024 Fund Analysis
RICA’s tough 2023 followed a stellar 2022…
01 Feb 2024 Bring some yin-yang into your portfolio in 2024
Inherent contradictions within portfolios can give them stability in a polarised world...
01 Nov 2023 Back to basics
Higher rates mean re-visiting portfolio construction...
14 Sep 2023 Risk on, risk off
Capital preservation trusts are maintaining historically low equity levels, despite the rally seen so far in 2023…
19 Jul 2023 Simply the Best
Investing in high quality companies was a successful strategy for many years, but has its time passed?
13 Jun 2023 Fund Analysis
RICA is available on a small discount for the first time in years…
15 Dec 2022 Beyond the Rubicon
Our first live event since March 2020 saw three fund managers describing their different perspectives on a vastly-changed investment landscape…
07 Dec 2022 Live sessions today - Live from London
Forgot to register for our Live from London event? Here are the details of today’s line-up of investment companies. Join us with an easy-access link to the presentations...
19 Oct 2022 Gimme shelter
Our analysts examine safe havens and defensive strategies as we endure the market's 19th Nervous Breakdown...
12 Oct 2022 The Buck stops where?
The US dollar has surged in 2022, but many are questioning whether this can be sustained...
15 Sep 2022 Fund Analysis
RICA is positioned to protect against inflation or a new leg down in equity markets…
13 Jul 2022 Ready player one
We wonder where, if anywhere, should investors look for returns after a tumultuous first half of the year…
06 Jul 2022 A game of two halves
In the second article of our series on the AIC Flexible Investment sector we see how performance has stacked up during two years when markets were poles apart...
22 Jun 2022 Spider's web
We outline our new quantitative system for mapping the crucial performance characteristics of investment trusts…
11 May 2022 Catch a tiger by the tail
As inflation bites harder than it has for decades, we consider the best ways for investors to hang on to their capital...
26 Jan 2022 Fight or flight...
Two of our analysts debate the impact that war in Ukraine could have on investors' portfolios...
30 Dec 2021 Great expectations
As the last of the mince pies wilts in the fridge, topped with a generous helping of stilton, the Kepler Trust Intelligence team stick a finger in the air and point toward their top picks for the year ahead…
22 Dec 2021 No humbug
Our analysts look back at a year of predictions, theories and ideas, and highlight those they think could matter most…
20 Dec 2021 Fund Analysis
RICA’s strong performance during the pandemic and in the market recovery has highlighted its credentials as an all-weather strategy…
01 Sep 2021 Winter is coming
Summer was a welcome opportunity for exhausted investors to turn their backs on the legion threats they face, but they haven't gone away and the days grow short - we examine four in detail...
25 Aug 2021 Is the UK’s debt a ticking time bomb?
Our analyst argues Rishi is right to worry about government debt and borrowing…
21 Jul 2021 Every which way but loose
We break down the AIC Flexible sector into more useful segments…
30 Jun 2021 Inflation – a real threat or hot air?
Two of our analysts ask whether recent high inflation numbers indicate something long-lasting and troubling is happening…
13 May 2021 Fund Analysis
RICA is an all-weather proposition, aiming to deliver over a range of market and economic outcomes…
05 May 2021 Vive la revolution
For thirty years quality has had a structural tailwind; but revolt is in the air and value is on the barricades…
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
04 Mar 2021 Slides and Audio: Ruffer Investment Company
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 04 March...
06 Jan 2021 This time next year Rodney...
We review the performance of the team’s ‘top picks’ for 2020 – including some proper plonkers – and place our bets for the year ahead…
02 Dec 2020 Fund Analysis
RICA is an all-weather proposition, aiming to deliver over range of market and economic outcomes...
15 Jul 2020 Why stagflation is likely and how to protect your portfolio from it
Our analysis suggests a combination of cost-push inflation and economic hardship could lead to a short, but unpleasant, period of stagflation...
01 Jul 2020 Oh the humanity...
We consider two strategies to cope with markets which, boosted by massive government support, may be witnessing the start of a ‘melt-up’ which may be followed swiftly by a melt-down...
05 Jun 2020 Deep impact
Audio and presentations from our conference this week, where fifteen of the world's best fund managers described a profoundly altered investment landscape...
29 Apr 2020 On solid ground
Our analysis of discounts highlights trusts which are likely to offer significantly less discount downside from the current level…
16 Apr 2020 Fund Analysis
RICA uses a range of asset classes to generate absolute returns for investors with an approach emphasising loss-aversion...
08 Apr 2020 Children of the Revolution
The outperformance of technology hints at an exciting possible future for the market when the virus is beaten…
30 Jan 2020 Is it time to run away?
With a sense of complacency in the air, our analysts debate the best ways to shore up your portfolio's defenses...
30 Oct 2019 All that glitters? The case for and against gold
Two of our analysts go head-to-head, debating whether gold is the ultimate safe haven asset...
16 Oct 2019 Life on Mars: could inflation take us back to the '70s?
We discuss two potential catalysts for inflation - and the assets that could offer a hedge against it...
16 Oct 2019 Fund Analysis
RICA uses a range of asset classes to generate absolute returns for investors with an approach emphasising loss-aversion...
25 Sep 2019 Master of all trades: the best multi-asset trusts on the market
Investment trusts are particularly suited to multi-asset strategies. Our research identifies the leaders in this increasingly popular field...
16 Jan 2019 There may be trouble ahead
We analyse why multi-asset macro funds have struggled and attempt to identify some possible closed-ended alternatives...
16 Jan 2019 Fund Analysis
This trust is well positioned to perform well if markets bounce, or the sell-off intensifies...
19 Sep 2018 Fund Analysis
A multi-asset fund which aims to protect and grow capital and has delivered annualised returns of 7.3% since launch, with very limted drawdown during tough periods...
28 Feb 2018 Gimme shelter
As the bear market for bonds and corresponding volatility in equities escalates we examine trusts that offer excellent capital protection..
27 Feb 2018 Fund Analysis
A diversified multi-asset trust with a clear focus on absolute returns which has seen it perform well in previous crises...
12 Jul 2016 Fund Analysis
12 Jul 2016 Riders on the storm
Multi-asset investment trusts for an environment where a global, active, currency-aware approach is essential...
12 Jul 2016 Anarchy in the UK
We collate the reactions of the City's leading investment companies analysts in the wake of the EU referendum...
View all

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