Defensive stance sees Ruffer performance suffer

Rica failed to gain from the market rally, but defended its positioning

Photo by K. Mitch Hodge on Unsplash


Ruffer Investment Company’s protection assets weighed on net asset value (NAV) in January, offsetting any gains it accrued during the recent market rally. NAV sat at 307p at the end of the month, down 0.3% from 31 December’s figure, though share price crept up 0.6% to reach 314p, according to its latest factsheet.

Ruffer aims to deliver annual returns of twice the Bank of England base rate, which currently sits at 4% after the most recent hike. Over the last five years, aside from 2018, Ruffer has considerably outperformed this benchmark, but the company will have to deliver a strong 2023 for this to continue, especially given January’s slow start.

The portfolio underwent a slight rebalancing during the month, as investment director Duncan MacInnes and manager Jasmine Yeo upped its exposure to UK, North American, and European equities, having cut its allocation to record lows last year.

Once again, its ‘better safe than sorry’ approach prevented Ruffer from taking full advantage of January’s strong market performance, though the report justified its defensive positioning, warning that the economy is not yet out of the woods.

“Ultimately, we don’t think the major asset classes have repriced sufficiently to reflect a (US) risk-free rate of 4.5% or higher, meaning that we see few good risk-reward opportunities,” MacInnes and Yeo wrote.

“The market is salivating at the prospect of Federal Reserve interest rate cuts beginning in the summer; it might be right, but the rally means that it will now be painful if the cuts aren’t delivered.”

The biggest change was in the fund’s allocation to illiquid strategies and options, which was cut to 13.8% of portfolio assets, down from 18.5% at the end of last year.

See also: Record low equity exposure pays off for Ruffer


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