One-year old Ruffer fund bags top rating from Square Mile

Square Mile has promoted Ruffer Diversified Return to its Academy of Funds, despite the fund having less than a one-year track record.

Ruffer launched the strategy, its first UK fund in over a decade, on 16 September 2021 as a daily liquidity alternative to its flagship £3.5bn LF Ruffer Total Return fund, previously only available to institutional and private clients. Since then, it has already attracted £1.3bn in assets.

Despite its short run, Square Mile said it felt comfortable awarding the multi-asset, absolute return fund an A-rating, given it “follows a tried and tested strategy dating to 1995”.

Analysts said the flagship fund, which Ruffer Diversified Return mirrors, has posted returns that compare “competitively” with stock markets while exhibiting only half the volatility. Currently run by Steve Russell (pictured), Matt Smith and Alexander Chartres, it has returned 451.3% since launch, according to data from FE Fundinfo, substantially higher than the MSCI World (256.8%).

But the research group said its “standout feature” is its low drawdowns.

“It has protected investors’ capital when it has mattered most, such as in the dotcom bust, the great financial crisis, the Covid crash and in the first half of 2022, drawing on a judicious and dynamic mix of growth and defensive investments,” it said.

“Particularly important in the latter category are options and other derivatives which are used to hedge stock market and interest rate risk when deemed appropriate by the managers.”

See also: Ruffer doubles down on bearish calls as risk appetite comes roaring back

Other young funds promoted

Ruffer Diversified Return was not the only fund with a shorter track-record to make it into Square Mile’s Academy of Funds in the August ratings round-up.

It also handed out promotions to the TT European Opportunities Long/Short fund, launched in September 2019, and the Cautious, Balanced and Growth funds from the M&G Sustainable Multi Asset range, which came to market in December 2020.

It said the former fund, which has $689m in assets, had proved its ability to protect capital in severe downturns, including the Covid crash in Q1 2020 and turbulent markets in the first half of 2022.

On the trio of M&G funds, analysts were impressed by lead manager Maria Municchi, despite her lack of experience as a solo manager, and the range’s “well considered” process and “strong level of supporting resources”.

But these funds are not as green as the eight-month old Stewart Investors European (Ex UK) Sustainability fund, which received a responsible ‘positive prospect’ rating. This is given when analysts believe the fund has the potential to be a “highly competitive proposition” but need more time to assess before awarding a full rating.

See also: Asset plunge sees Pimco UK income bond lose Square Mile rating

Rebranded Axa and Abrdn funds retain ratings

Elsewhere, Square Mile confirmed the Axa Framlington Managed Balanced fund and a slew of Abrdn strategies would retain their ratings, following changes to their names.

The nine funds from Abrdn (below), including the AAA-rated UK Smaller Companies fund, shed their ASI prefix for the fund group’s updated moniker in August, a move which did not impact their investment approach, Square Mile said.

The Axa vehicle underwent a more radical rebranding, changing its name to the Framlington Global Sustainable Managed fund to reflect the fact the strategy now includes a focus on “ESG leaders,” while avoiding harmful industries and businesses.

“While this constitutes an evolution of the fund’s investment approach, Square Mile’s analysts do not view it as a significant departure from its previous mandate and there has been minimal disruption to the underlying portfolio. The fund therefore retains its A rating.”

Analysts said the fund did not meet the required threshold to qualify for a ‘responsible’ rating but said its ESG score had been adjusted to reflect the greater emphasis on sustainability in the investment process.

Source: Square Mile