Ruffer Investment Company Limited Monthly Investment Report - December 2023 (4194Z)
12 Janeiro 2024 - 4:00AM
UK Regulatory
TIDMRICA
RNS Number : 4194Z
Ruffer Investment Company Limited
12 January 2024
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 December
2023.
http://www.rns-pdf.londonstockexchange.com/rns/4194Z_1-2024-1-11.pdf
Christmas arrived early for asset owners last year, as December
saw US equities approach all-time highs and the bond rally
continue. The Federal Reserve provided the festive cheer, by
pivoting their message from 'higher for longer' interest rates to
'lower, sooner', projecting three cuts in 2024 thanks to falling
inflation. This reinforced the market's soft-landing narrative and
drove a US-centric Santa rally. Elsewhere, the Bank of Japan left
policy unchanged despite significant noise, and investors remained
unimpressed by the lack of concrete stimulus measures in China.
As was the case in November, the fund's fixed income holdings
were the largest contributor - adding over 1.5% to performance.
Yields continued to fall as the Chair of the Federal Reserve
assured markets that they were unlikely to raise interest rates any
further, taking the US ten year bond yield to 3.9%, down more than
1% since October. Our US exposure participated in the rally as the
market broadened out from the 'Magnificent 7' technology stocks.
Gold exposure was helpful, as the metal reached new highs.
Meanwhile, the yen managed to gain over 4% against both the US
dollar and the pound, despite the Bank of Japan leaving their loose
monetary policy intact, adding over half a percent to performance
in addition to gains from our yen call options. However, despite
making positive returns in both December and the final quarter of
2023, the fund continued to face headwinds from its protective
positions, which suffered as equities rose and credit spreads
narrowed.
It continues to be our belief that tighter liquidity conditions
present a significant risk to markets. Accordingly, we have reduced
the fund's duration by roughly half from its recent peak, with
sales of US bonds and gold bullion. This felt prudent given the
bond market is now pricing six interest rate cuts in 2024, double
the amount anticipated by the Fed. We believe a soft landing is now
close to fully priced, leaving the market exposed to any pushback
from policymakers or the data.
We maintain the view that it is too early to declare a
soft-landing victory. Even if the probability of this outcome has
increased, market pricing has moved even further, creating an
asymmetry in asset prices. We think the scenario in which the
market's six interest rate cuts are validated, is the arrival of
recession. However, a soft landing is not an impossibility, and the
fund holds over 20% across equities and commodities which should
benefit from a broader market rally and further economic strength.
This is also supported by the remaining fixed income positions and
gold equities, which should rise in value if yields fall
further.
Portfolio balance, which was painfully elusive at points last
year, is now much more secure - evident in recent months as markets
have rallied and the fund has delivered a positive return, despite
its defensive positioning. Crucially though, if liquidity
conditions and the economy do deteriorate, our derivative holdings
- primarily credit protection and exposure to the VIX, should
appreciate sharply. There were glimmers of this mid-month, as a
small but sharp one day sell-off in the S&P saw the VIX index
spike 12% intraday.
Overall, we enter the new year with the mindset that we are
continuing to travel towards the danger, rather than away from it,
and we will not let a disappointing 2023 obscure what we see in
front of us.
An error in calculation of the NAV total return since inception
has led to the figure being understated by c 3% in the monthly
reports published between July and December 2023. The performance
methodology has been updated to remediate this error and the NAV
total return since inception figure in this report is correct.
Please note that this notice does not affect any of the published
NAVs.
Enquiries:
Sanne Fund Services (Guernsey) Limited
Jamie Dodd
Email: RIC@apexfs.group
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