Fund Profile

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
RICA’s strong performance during the pandemic and in the market recovery has highlighted its credentials as an all-weather strategy…
Overview

Ruffer Investment Company (RICA) is managed with an unconstrained approach in order to grow investors’ capital over the long-term while protecting it against the key risks the managers see on the horizon. The aim is to provide a positive return in essentially all circumstances, with a focus on avoiding material drawdowns and specifically the large drawdowns that occur during crises or changes of economic environment.

As we discuss under Performance, this has been achieved since launch in 2004, with the multi-asset portfolio outperforming UK equities, with significantly fewer down periods and those being of lower magnitude than equities on average. The maximum fall in NAV since inception is 8.6% compared with a fall of more than 45% in equities. Performance was particularly strong during 2020 as some long-standing protective positions paid off in a crisis, exactly as designed. This strong performance has led to the shares trading on a sustained premium (see Discount), and this is currently 2.8% despite the recent success of an open offer which raised c. £41m of fresh capital.

RICA is managed by Hamish Baillie and Duncan MacInnes. They work with the broader Ruffer research team. Jonathan Ruffer, founder of the fund management company, remains actively involved in the investment strategy and decision making process. The investment process is informed by both top-down macroeconomic research and bottom-up stock specific research. A major conviction at present is that the world will see substantially higher inflation in the coming years and there is limited scope to raise interest rates to counter this. However, as we discuss under Portfolio, the managers use hedging strategies to ensure they are not over-exposed to one outcome.

Analyst's View

We think RICA could be characterised as a simpler and cheaper hedge fund or absolute return fund strategy, making available to the average investor a sophisticated way of managing money with a focus on downside protection but also the potential to make good absolute returns. It is a good option for investors who want to make money in a steady fashion, without suffering the drawdowns often experienced in equity markets, or who are looking for a diversifying and protective strategy to hold in their portfolio instead of or alongside bonds.

RICA’s performance in 2020 was particularly impressive. We think it demonstrates how a patient, contrarian approach can work well over the long run. Of course, it followed a period of sluggish returns, and investors need to have the patience to sit through periods like this. It is also worth considering that in a complacent or ebullient market, the trust will likely underperform equity markets, due to the cost of their hedging strategies, their contrarian approach to equity selection and multi-asset approach.

A key consideration for investors is whether they share the managers’ macroeconomic views and whether it matters. For us, the reaction to the pandemic has indeed shown that authorities are trapped in a cycle of debt creation which makes one of the central theses of the Ruffer team – that interest rates must be pinned below inflation – look much more secure. The way the portfolio is structured should mean there is some protection against the managers’ macro expectations not playing out too. However, it is worth bearing in mind that the economy is extraordinarily complex and hard to read so there is always the chance unexpected events won’t be hedged.

bull bear
Strong track record of making good returns while limiting drawdowns, especially in crises
Long-term and contrarian approach can lead to periods of sluggish performance
Well-positioned for an inflationary environment
Could suffer if central economic theses of the team are proven wrong – i.e. inflation falls significantly and/or real rates rise
Ability and willingness to use unconventional strategies to generate returns when conventional assets suffer
Premium has been high in recent months (but has moderated since the open offer)
Continue to Portfolio

Fund History

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...
13 May 2020 Braving the new world
Join 15 of the UK's best known fund managers at the Kepler Trust Intelligence Virtual Summit to find out how they see the world after the pandemic...
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 a focus on loss-aversion...
25 Sep 2019 One-stop shop: how multi-asset trusts offer superior diversification
Investment trusts are particular suited to this mode of investing. We examine their advantages over open-ended funds and highlight the trusts which do it well…
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...
16 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...
16 Feb 2018 Our survey says
Readers of Kepler Trust Intelligence seem little concerned by recent market volatility, but expert investors are less confident...
09 Feb 2018 The madding crowd
Recent volatility could be a taste of things to come, so we examine trusts that offer capital protection...
08 Mar 2017 End of the road...
With correlations between asset classes on the rise, we take a closer look at the role trusts in the IT Flexible Investment sector can play within a cautious investor's portfolio...
24 Nov 2016 Investment trusts vs OEICs: The definitive guide
We take a look at how investment trusts really stack up against their open-ended fund rivals...
28 Jul 2016 Funds for heavy weather
Investment trusts for a world without certainty...
29 Jun 2016 Beyond Brexit: Why China may be a bigger threat to economic stability...
Britain’s departure from the European Union is not the only threat to our prosperity, according to Troy founder Sebastian Lyon...
27 Jun 2016 Broken Britain
As the UK enters a period of uncertainty the like of which has not been seen since the Suez Crisis, we highlight four trusts which have little exposure to our unfolding catastrophe....
03 Jun 2016 Japan: Negative interest rates are just the beginning
Helicopter money could be among the measures policymakers use to revive Japan's struggling economy...
26 May 2016 Fund Analysis
We meet the management team who are preparing the portfolio for 1970s style inflation...
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