After a strong 2016 the performance of the Ruffer Total Return fund has rather less dynamic this year.
While the team is not exactly gloating about this, it has no regrets either.
'We have been doing a fair impression of marching on the spot so far this year,' the pair said in their monthly update.
'We are used to this, and whilst suitably apologetic over missing out on apparently easy gains in equities this year, do not regret our cautious stance.'
The fund's relatively low 40% exposure to equities, with a bias toward value and cyclical stocks, held back performance in the first half.
'Following last year’s brief flirtation with reflation, which saw bond yields rise and cyclical/value stocks making gains, this year investors have flocked back to the "new normal" universe of bond-like equities (consumer staples) and growth (tech),' Russell and Ballance explained.
'Introducing uncertainty over interest rates, bond yields and inflation is to say the least unlikely to be supportive of either equities in general or these crowded trades in particular.
'Therefore we are content to remain somewhat on the sidelines for the time being.'
The duo added: 'It may just be anecdotal, but in a market where there are now more equity indices and Exchange Traded Funds (ETFs) than there are US stocks to populate them, and with many of these ETFs oriented to low volatility or bond-like strategies, we think being rather dull for a while may not be a sin.'
With politics taking centre stage the fund fell by 1% in June, faring better than the FTSE All Share's 2% decline.
UK prime minister Theresa's May's failure to increase her authority in the snap general election, and a resurgent Labour under Jeremy Corbyn, could have wider ramifications for investors,' Russell and Ballance suggested.
'What we are witnessing in the UK is a shift towards more populist policies and away from austerity that seems likely to be echoed across the western democracies, albeit at differing speeds.
'The end result of this, it seems to us, will be inflation, as the only palatable way to address the debt and inequalities built up over recent decades.'
Contradictory messaging from central bankers has not helped the fund's cause.
'In the UK and eurozone, where almost no change in interest rates had been imagined for the foreseeable future, uncertainty was suddenly priced in, the result being a sharp uptick in bond yields and interest rate expectations,' Russell and Ballance said.
'This has not been a helpful background for our long-dated index-linked gilts.'
However, this is something the pair had anticipated.
'[Accordingly] we have prepared the portfolio to cope with the temporary setbacks and volatility that such ‘noise’ over interest rates may bring.
'So, whilst the index-linked bonds declined during the month, our small but potent interest rate options gained in value to offset this.'