Ruffer Investment Company Limited Monthly Investment Report - September 2023 (0306P)
06 Octubre 2023 - 9:48AM
UK Regulatory
TIDMRICA
RNS Number : 0306P
Ruffer Investment Company Limited
06 October 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
September 2023.
http://www.rns-pdf.londonstockexchange.com/rns/0306P_1-2023-10-6.pdf
There was a growing sense through September that a combination
of US economic resilience and higher oil prices would force the US
Fed to keep interest rates higher for longer. The latest 'dot plot'
of Federal Open Markets Committee board members' expectations for
interest rates over the coming few years, which the Fed uses to
influence the market's expectations of the level and path of future
interest rates, seemed to confirm as much - suggesting for the
first time that rates would stay above 5% for all of 2024. A
persistently strong economy with a persistent inflation problem
demands persistently high interest rates. Equity and bond markets
had already started to roll over in anticipation, but the release
of the dot plot on 20 September encouraged them both lower into
month end.
That the fund largely sidestepped these falls was thanks to the
large allocation to very short-dated UK and US government bonds,
which carried positively even as longer-term interest rates rose.
The fund's position in oil and energy and related equities also
made a positive contribution, benefitting from supply-side
discipline from both OPEC and marginal US producers. It is our view
recession risks are building, and oil will not be immune once the
market downgrades demand expectations, so we took some profits.
On the other side of the ledger, the fund's longer dated bond
holdings, in US (TIPS) and UK inflation-linked bonds, were the
biggest detractors from performance. Towards the end of the month,
we decided to take advantage of these falls to add to US TIPS,
allocating 5% of the fund's capital to ten year bonds offering real
yields of nearly 2.3%. This was partly funded by a sale of the
small remainder of the fund's gold bullion exposure. The latter has
remained remarkably resilient in the face of persistently high US
real rates, giving us an opportunity to switch the exposure into
TIPS at what we deem very good relative value.
We also took advantage of the spurt of US dollar strength in
September to reduce US dollar exposure in favour of further
bolstering our yen position, which now makes up c20% of the fund.
We continue to expect the yen to be one of the assets at the
epicentre of an unwind of trades that have proved popular this year
but that we deem unsustainable.
On the flip side of US dollar strength was sterling weakness,
which also allowed us to exit the position in Australian government
bonds on favourable terms. We remain cautious on sterling, but it
has fallen hard and fast over the last couple of months and we
don't want a temporary reversal to hold back performance.
A darkening economic reality, combined with tight monetary
policy in the UK and US and incrementally restrictive policy from
the Bank of Japan, we think will ultimately cause a great, and
quite possibly sudden, reversal of the market moves over the first
eight months of 2023. When it comes, this should benefit the fund's
biggest positions, in UK and US inflation-linked bonds, and the
yen. We may well look back on September 2023 as a turning
point.
We are holding a meeting for shareholders on Tuesday 5 December
at our London office. 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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October 06, 2023 10:48 ET (14:48 GMT)
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