Fund Profile

Ruffer Investment Company 29 October 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 strong performance in the summer crash could bode well…
Overview

Ruffer Investment Company’s (RICA) aim is to deliver consistent positive returns, regardless of how financial markets perform, while protecting against market falls. The board’s view is that if this can be achieved, then real returns can be delivered. The managers, Duncan McInnes and Jasmine Yeo have a keen eye for the risks to markets and a contrarian tilt. They have full freedom to invest across asset classes in order to meet their objectives and find assets that can perform well in multiple environments, most importantly if equities and/or bonds do poorly.

The portfolio is currently full of assets the managers call ‘ugly ducklings’, meaning assets which are overlooked and unloved and therefore cheap. Examples among many include the Japanese currency, derivatives protecting against credit spreads widening, China equities and gold miners. Being cheap and unloved typically means having an asymmetric return profile—lots of potential upside in the right scenario and limited downside in the wrong scenario. Many of these positions paid off in a big way in August when equity markets suffered a flash crash (see Performance section), and arguably this was proof of concept for the managers’ positioning.

Duncan and Jasmine argue that investors are complacent, with a ‘soft landing’ of gently lowering inflation and interest rates and a modest, if any, recession priced in. RICA’s positioning should mean it does best if these assumptions prove over-optimistic, while there are some growth assets in there to deliver returns too.

After an outstanding 2022, returns to RICA have been sluggish since. RICA issued huge amounts of shares in 2021 and 2022, with the trust trading on a premium consistently. After this weaker performance, the trust has slipped onto a Discount, and the board have taken significant action with a meaningful buyback programme which has kept the shares trading close to par.

Analyst's View

We think RICA offers valuable portfolio protection in the current environment. There is a clear consensus in the markets that US rate cuts can proceed without leading to a rebound in inflation and without being accompanied by a significant recession. You don’t have to be convinced this is wrong to worry about what would happen if it were. We think it is striking that the managers report their derivative protections are cheap despite all the risks that abound in markets and would suggest it is often a good strategy to buy insurance when it is cheap.

In particular, we think investors should be concerned about the potential for equities and bonds to both do badly at the same time. We saw this in 2022 when RICA delivered excellent performance as bonds and equities were under the cosh. The managers argue that historically, correlations between the two asset classes have been high when inflation has been high. Inflation remains persistent, and there is a possibility the average inflation we are going to see over this cycle is much higher than it was in the post-financial crisis era. Believing we are going to go back to near-zero interest rates with all that means for equity markets could be the source of the current consensus positioning across markets. If inflation remains persistent and volatile, and rates have to be kept higher—and maybe the Fed is forced to raise rates before the expected cutting cycle is complete—this could have major implications for asset prices, particularly if the consensus on the future crumbles.

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
  • 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...
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
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...
View all

Welcome to Kepler Trust Intelligence

Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.