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Ruffer sticks with cash as macro fears mount
by Robert St George on Oct 09, 2013 at 13:58
Ruffer held its cash allocation at 14% in September, admitting that it runs the risk of an upside surprise if the US shutdown is 'resolved favourably' but that it was holding back resources for greater certainty.
In September the trust’s net asset value declined by 0.9%, leaving it with a final loss for the third quarter of 0.6%. In contrast, the FTSE All Share rose by 1.1% in September and gained 5.6% across the three-month period. Over the year-to-date the portfolio has returned 9.4%.
Baillie and Russell (both pictured) noted that sterling’s 4.5% appreciation against the dollar in September knocked 1% from their performance in the month; the fund is 24% exposed to the dollar and is not hedged against it.
They characterised their cash holding as ‘reflecting our nervousness of both equity markets and the short-term outlook’.
‘This may prove to be the wrong thing to do if the gridlock in the US is resolved favourably, but it feels like a time to have some dry powder to deploy,’ Baillie and Russell explained.
In addition to the high cash weighting, Ruffer holds 7% of its portfolio in gold and gold equities and almost a third in predominately sovereign bonds.
Elsewhere the managers took profits on Vodafone and exploited recent lower pricing to add to small caps and to its holding in IBM.
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