Ruffer Investment Company Limited Monthly Investment Report - October 2023 (3709T)
14 Novembre 2023 - 8:00AM
UK Regulatory
TIDMRICA
RNS Number : 3709T
Ruffer Investment Company Limited
14 November 2023
RUFFER INVESTMENT COMPANY LIMITED
(a closed-ended investment company incorporated in Guernsey with
registration number 41996)
LEI 21380068AHZKY7MKNO47
Attached is a link to the Monthly Investment Report for October
2023.
http://www.rns-pdf.londonstockexchange.com/rns/3709T_1-2023-11-14.pdf
October saw a sell-off in bond and equity markets, with both the
benchmark US ten year Treasury bond and the MSCI World equity index
falling by over 3%. It was the sixth consecutive month of losses
for Treasuries and the third consecutive month of losses for the
equity market.
Rising bond yields (so falling bond prices) since the summer
have been driven by resilient economic data, a theme that continued
in October, and by further increases in forecasts for US government
spending. Something that also looks set to continue, with the
conflict in the Gaza Strip adding further to US defence and foreign
aid spending.
In the portfolio, although the protections worked (especially
credit) and the balance of the portfolio was much improved as
compared to earlier in the year, the muted nature of the equity
sell-off so far has meant that these gains were insufficient to
fully offset the losses from our bond holdings.
It has long been our belief - expressed on these pages almost
every month this year - that rising bond yields would, slowly then
suddenly, cause damage to financial markets and thereafter the
wider economy. Wary of the timing of such an event, we have kept
the portfolio relatively lightly positioned this year, but that has
not prevented it from failing to deliver on Ruffer's core objective
of preserving capital over a rolling 12 month period. Whilst
similar previous rolling 12 month losses for the Ruffer portfolio
have historically heralded significant downturns in markets (and
ensuing positive returns for the portfolio), that is scant
consolation at this point.
In October, however, we drew a line in the sand. The bond market
narrative shifted from 'recession is still a possibility' to
'definitely a soft landing', with long-dated US yields rising
through the important 5% level as a result. This shift gave us an
attractively priced opportunity to significantly increase the
portfolio's interest rate sensitivity (duration), with investors
seemingly comfortable that both the economy and financial markets
can support higher interest rates for longer. We did so by adding
to our existing longer duration position in US TIPS (treasury
inflation protected securities) and also buying long-dated nominal
government bonds for only the second time since the financial
crisis (the previous time being the prior high in yields in October
2022).
It is our firm view that bond yields cannot rise further from
here without doing significant damage to both the real and
financial economies. In the short term the opposite may be more
likely - that bond yields come down, giving markets a temporary
fillip - and we should benefit from such an outcome through the
fund's increased duration. However, signs are increasingly visible
that high interest rates are causing damage in financial markets
(struggling small caps, utilities and banks) and now also in the
real economy (higher corporate delinquencies, falling job openings
and sky high mortgage rates). So far, this year has been a
difficult one for our portfolio and a trying time for our
investors, but we feel the fund is well set to deliver on our aims
in the volatile environment to come.
We are holding a meeting for shareholders on Tuesday 5 December
at our office in London. If you would like to attend please email
ruffer@ruffer.co.uk .
Enquiries:
Sanne Fund Services (Guernsey) Limited
Jamie Dodd
Email: RIC@apexfs.group
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