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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
RICA’s tough 2023 followed a stellar 2022…
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.

Analyst's 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

12 Apr 2024 Inflationary trends
A higher US CPI print is indicative of lurking inflationary trends...
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?
16 Jun 2023 Known unknowns
How should investors prepare for a prospective economic downturn?
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...
11 Nov 2022 Called it
Some managers predicted we’d end up with the chaos we have today – but will they still perform well?
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...
24 Jun 2022 Delivering returns in a financial storm
We look at three trusts that have managed to deliver returns for shareholders so far in 2022…
22 Jun 2022 Spider's web
We outline our new quantitative system for mapping the crucial performance characteristics of investment trusts…
20 May 2022 Is it time to ditch index funds?
Averaging out makes sense in a boom market but may be much riskier in the future…
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
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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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