Rising equity markets have threatened the defensive positioning of their £326m Ruffer Investment Company, and as a result, Russell and Baillie told investors that their holdings in stocks like BT and ITV must work hard to counteract the drag from elsewhere.
But despite this, the team said they will stick by their positioning because interest rates close to zero and quantitative easing cannot persist.
Moreover, the corporate earnings season also handed the pair some evidence, and the team pointed out revenue growth had been “lukewarm” at best.
“There is money to be made in this market but it comes with considerable risk – namely the hope that you can ride the wave of central bank largesse and get out before the next man,” Russell and Baillie said.
With this in mind, the team added two copper miners to their portfolio during October, noting that these would benefit from the perception growth is improving as well as a weaker dollar, two factors which would hurt the trust’s defensive positions.
But Russell and Baillie said there was no justification for getting more heavily invested in equities. “The best argument for equities today is the lack of alternatives and that is not a good reason for holding any asset class for longer than the short term,” they argued.
