Ruffer returns in line with long term averages – Ruffer Investment Company has published results for the year ended 30 June 2017. Over the period, the NAV total return was 8.75%, the return to shareholders was 12.9% and the dividend fell to 2.6p from 3.4p. Ruffer’s target return is twice the Bank of England base rate. This worked out at 0.5% over the period. They point out that the All-Share Total Return Index rose by 18.1% over the same time but the fund’s goal is capital preservation not beating equity indices. They think this as a satisfactory result given the defensive positioning of the company in the last 12 months and it is in line with the average annual rate of total return since launch on 8 July 2004 (8.4%).
The report has much to say on the macro backdrop which will no doubt feature in Quoteddata’s next monthly economic and political roundup. On the portfolio performance, the manager had this to say:
“It will come as no surprise to hear that equities were the Company’s best performing asset class and the large weighting to Japan made this the largest positive contributor to performance (608 bps adjusting for currency hedging). Whilst there is an interesting macro story in Japan, focussing on Abe’s ability to slay the dragon of deflation, our investments there also provide exposure to economic growth outside Japan and by extension, strong global equity markets. Throughout the equity book, a focus on cyclical and value stocks proved effective in the second half of 2016 as a reflation trade set in putting pressure on bonds and bond-proxies in the equity market. Index-linked bonds were not immune from this move, but the blow was cushioned in the UK holdings (where most of our duration lies) through rising breakevens and in the performance of rate sensitive global equities (life assurers and banks in Japan performed particularly strongly in the final months of the year). Over the full period, index-linked bonds made a small positive contribution (226 bps). At the bottom end of the ledger, the Company’s protective assets held us back – such is the nature of an insurance policy. Gold cost 43 bps and options (equity and interest rate protection) cost 145 bps.”
RICA : Ruffer returns in line with long term averages