Ruffer has bagged $1bn after selling out of bitcoin in April due to concerns over the cryptocurrency’s share price was “exhibiting more risk”.
The asset manager ploughed £550m into the cryptocurrency last November as a as a long-term uncorrelated portfolio hedge. In January it defended its holding, arguing that the digital coin has merit as a long-term uncorrelated portfolio hedge similar to gold.
The same month Blackrock also added further legitimacy to crypto when it announced it was opening up two of its funds to the possibility of investing in bitcoin futures.
‘Interest rate and credit protections offer more favourable asymmetry than bitcoin’
A Ruffer spokesperson said bitcoin had been a successful investment since the firm initiated its position last November as an additional protection in client portfolios. However, the asset manager has been managing its position and sold the last tranche of exposure in April.
“At purchase, we saw bitcoin as a diversifier to gold, offering additional portfolio protection,” they said. “Long term, we remain interested in digital assets and the role they can play in real wealth preservation. In the short term, following the sharp increase in the bitcoin price, we felt bitcoin was exhibiting more risk.
“Our focus is on building robust all-weather portfolios, which draw on a toolkit of unconventional protective assets. At April’s prices, we saw our interest rate and credit protections as offering more favourable asymmetry than bitcoin.”
Younger people spending less time trading
Speaking to the Sunday Times, Ruffer investment director Hamish Baillie said the firm started to sell down its position at the end of last year and early this year before exiting entirely in April.
The reason he gave was partly because younger people would not be spending as much time trading now that the lockdowns are ending. He said in November last year younger people were investing more in assets like bitcoin following the US government’s handing out of stimulus cheques.
“When the price doubled we took some profits for our clients in December and early January,” he told the paper. “We actively managed the position and by the time we sold the last tranche in April the total profit was slightly more than $1.1bn.”
Bitcoin was held in the Ruffer Investment Company, as well as the Ruffer Multi Strategies fund and two proxy equities, Microstrategy and Galaxy Digital.
The price of bitcoin slumped in May after Tesla chief executive Elon Musk announced on Twitter the electric car maker would stop accepting the cryptocurrency as payment for its products.
