The team behind the popular Ruffer Investment Company (RIC) has vowed to make its ‘greed assets’ work harder after a challenging 2012.
While the pair shrewdly hedged their exposure to the yen ahead of Shinzo Abe’s landslide election win and the subsequent collapse in Japan's currency, Ruffer paid dear for protection at a time when safety came with an unusually high price tag.
‘It was a year when protection was not required,’ Russell (pictured) and Baillie confessed.
While the performance of RIC’s risk, or 'greed’ assets had been palatable, with western equities contributing some 3% and Japanese stocks adding around 5%, RIC was left not just counting the cost of missed opportunity but the price of protection as it sought shelter for shareholders funds.
‘2012 will not go down in the Ruffer annals as "un grand millésime" for performance. Over the last five years we have managed to capture a good deal of the rise in markets and protect investors from the falls. However, in 2012 we made painfully slow progress when conditions appeared to be benign,’ Russell and Baillie said, as they looked for a route to better returns in 2013.
But rather than adding huge levels of risk to their portfolio, the managers of the Citywire Selection fund vowed to make key assets work harder while using index linked bonds to protect against central bankers’ decision to underwrite deflationary risks.
They said: ‘Our answer is to ensure the greed assets sweat harder rather than increasing the level of risk in the portfolio.'