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Ruffer: our unjust bear market moniker
by Sarah Miloudi on Sep 10, 2013 at 10:44
Ruffer Investment Company (RIC) has upped its cash weighting and trimmed its equity holdings - but its managers have denied the vehicle should be dubbed 'portfolio insurance'.
Steve Russell (pictured) and Hamish Baillie, who manage £324 million RIC, told shareholders that they took time during August to consider their trust's objectives and the 'bear market operator' title sometimes thrust upon them by investors.
The pair said it was an 'inaccurate' description of their popular fund, though added the vehicle's emphasis would always be on 'not losing money'.
'If we can achieve this in good markets and bad then the compounding effect is significant,' Russell and Baillie said, pointing to the trust's longer term returns which over five years have seen RIC grow its net asset value by 75.5%, versus a 54.3% gain by the FTSE World.
The pair added: 'For this reason, the moniker bear market operator is unjust and will only ever be heard from a relative return investor – in theory, if we achieve our investment objective then we should perform in the same manner in both bull and bear markets.
'Of course, in the real world this can never be certain, which is why portfolio insurance is a dangerous way to view the Ruffer Investment Company. Ideally, our returns will show a low level of correlation to other assets in our investors’ portfolios, but in a world of increasing correlation between different asset classes (the rising tide of quantitative easing has floated most boats) this is far from assured.'
Also during August, the managers told investors they had taken profits on a spread of equities, reducing RIC's holding from around 55% in July to 43%, and raised its cash weighting to 14% from 9% the month before.
Japanese equities continue to make up a large share of the investment trust's holdings, and at the end of the month they accounted for 18% of its assets, though the figure is slightly down on July's 22% exposure.
RIC's UK equity holdings were also trimmed from 11% to 10%, and the trust's position in Far East stocks was lowered slightly from 5% to 4%.
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on Dec 06, 2013 at 14:28