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'London bus phenomenon' drives Ruffer to best monthly gain in four years
by Sarah Miloudi on Feb 12, 2013 at 10:07
The 'London bus phenomenon' has helped Ruffer Investment Company (RIC) post its biggest monthly gain since December 2008.
While offering some reason for cheer, Ruffer was quick to warn its strong run in January could also be cause for concern.
'Absolute return investors should fret when all parts of their portfolio are going up together as it begs the question as to why everything will not go down together when the favourable wind ceases,' said Steve Russell (pictured) and Hamish Baillie, the duo at the helm of the £295 million trust.
RIC's net asset value (NAV) at the end of January was 206.4p, representing a rise of 4.9%, and Russell and Baillie said virtually every asset class had produced a positive return. But over the year the trust has struggled relative to its historic performance, and delivered a 7.84% rise in NAV per share versus a 13.72% gain the FTSE World Index.
Despite their concerns, however, the respected RIC team said it has no plans to re-jig the portfolio, and will be sticking with its 21% allocation to Japanese equities, 11% exposure to gold and gold mining shares, and 9% weighting to index-linked gilts.
Largely, the portfolio was boosted by two key events during January - the impact of the continued weakness in the yen on corporate Japan and the UK's decision to leave the calculation of the retail price index (RPI) unchanged.
Russell and Baillie said that while the RPI announcement was positive, it should be regarded as helping the trust 'play catch-up' following the instability created by last year's consultation and the pair believe they have the right allocations in place.
They said: 'We often say to investors that we are not trying to be 100% right because by doing so we would run the risk of being 100% wrong and we don’t think we are clever enough to be right all the time!
'Should we be re-jigging the portfolio on the back of January’s move? We think not. This was a case of the London bus phenomenon; we were waiting for some time in 2012 for the performance to pick up and then two significant pieces of news came along together,' they added.
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