Ruffer Investment Company

Ruffer Investment Company saw its positions in US and UK index - linked bonds act as a ‘dragging anchor’ during February when investors’ increased appetite for risk hurt returns on the Citywire Selection star pick.

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on Apr 11, 2012 at 00:01

Citywire Selection Verdict: The trust’s NAV was in positive territory during 2011, although a slight fall in the premium saw the share price edge into the red for the year. Long term performance returns remain very strong from one of the leaders in multi asset investing which has a strong focus on capital preservation. Correlation across asset classes has been high, but Jonathan Ruffer, Steve Russell and Hamish Baillie remain focused on ensuring their offsetting assets are fulfilling their role in protecting other parts of the portfolio. Around a third of the trust is allocated to index-linked bonds and Japan provides the largest equity slice at 24%. The remainder is mainly held in Western blue chip equities.

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5 comments so far. Why not have your say?

Thanks Jonathan for this timely piece.

My portfolio has, like Ruffer, benefited (relative to the market!) through a 10% holding in the iShares USD TIPS ETF. Along with some gold bullion (also via an ETF) these have been a good hedge for over a year now.

If, as I believe, the global equity market will now make a very slow recovery what is your (or any reader's) opinion on the likely performance of US TIPS? The growing acceptance that 'inflation is the least painful way to salvation' suggests hold; whilst the inevitable move towards bargain hunting of higher risk equity assets suggests sell. I'm in a quandary.

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It is going to be difficult for several years to get inflation up a lot on a lasting basis, as there seems just too much spare capacity in Western economies for a wage/price spiral to be achievable. Longer term it might well be different.

On this basis, I would suggest that yields on conventional Treasuries will ultimately prove to be far too low, while TIPS only seem attractive to those with a very long time horizon (such as pension funds?). The supply of TIPS is not that large, so, if there is a bubble, it may seem particularly difficult to know when it might stopp inflating.

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Anyone who believes that linkers are in any way similar to conventional gilts needs to test the accuracy of the assertion by doing some mathematical simulation.

The similarity of these products is like that between calcium carbonate and cheddar.

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These guys know what they are doing, they don't have a crystal ball or claim to know all the answers but they are often found to be ahead of the curve.

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Truth Sayer

Sep 22, 2011 at 01:55

The markets look ready to roll over. The western economies look too weak to support good earnings across the board. All this money printing and austerity will bite soon.

Equities will soften and precious metals will begin to rise again. There are some high yielding stocks out there but the price will get a lot more attractive over the next few months.

It will be a wild ride though.

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