The flagship £3.2bn Total Return fund currently holds a 15% position in the US dollar, almost double its exposure at the start of the year.
“This was driven by our conviction that the dollar could act as a protection asset, rising when equity and bond markets fall,” fund managers Steve Russell and David Ballance said in the fund’s latest factsheet.
The pair attributed sterling weakness to disappointing UK Q1 GDP growth and dovish comments from Bank of England governor Mark Carney, ahead of the monetary policy committee’s decision this week to hold rates at 0.5%.
“UK GDP growth is crawling to a near halt,” they said.
In April, the first estimate for Q1 GDP growth came in below consensus at 0.1%, throwing bullish predictions from star fund managers Richard Buxton and Neil Woodford into question.
The Total Return fund now holds 69% in sterling, 7% in yen and 5% in gold.
In March, the fund managers had said there were a scarcity of hiding places for bearish investors.
At that time, they listed the dollar as a traditional safe haven that failed to perform during market stress in Q1.
They noted gold, gilts, treasuries and Swiss francs had also fallen since the start of the year.
The fund, which launched in 2000, has fallen 0.1% over the last year compared to 2.9% gains in the IA Mixed Investment 20-60% Shares sector.
It is described as an “all-weather vehicle, designed to perform well whichever way the market moves”.
In March, the half-year results for the Ruffer Investment Company, a listed sister portfolio to the Total Return fund, said its cautious positioning during a year when most markets were up led to “disappointing” returns.
