Ruffer delivers positive returns during tough year as Baillie steps down – Ruffer (RICA) has posted its annual review for the year ended 30 June 2022, during which time its share price total return was 5.6% and the NAV total return was 5.9%.
The team recently announced the departure of its long-service manager Hamish Baillie who will officially leave the company at the end of July after 20 years. Duncan MacInnes will become sole manager. He said: “From a personal perspective, I have much to thank Hamish for. More than a decade ago he gave me a job and an opportunity which has changed my life.
“As a boss he was formidable but fair, always setting relentlessly high standards. In the last few years as a partner and co-manager he has been an effective sounding board, an astute moral compass with consistently good judgement. If the measure of a good man is to leave those around him better than he found them, then Hamish Baillie is undeniably a good man.”
Review
Over the 12 months, the toolkit of unconventional protections performed exactly as desired. Options added 3.7% and Ruffer Illiquid Multi-Strategies Fund added 3.3%. These protections provided both negative correlation and duration at a time of market stress and high cross-asset correlation in conventional markets.
Energy equities added 2.8% to performance and the team took significant profits during the period. In the summer of 2021, Ruffer had a 7% allocation to these stocks and at the end of the period this was closer to 4%.
Gold exposure and gold equities cost the portfolio 0.9% during the period. The largest individual pain came from Kinross Gold (-0.4%), which was the largest exposure in the portfolio to Russian asset risk.
Meanwhile, inflation-linked bonds cost the portfolio 3.5%, with the longest dated 2073 issue down 51%. The team has long called these assets the ‘crown jewels’ in the portfolio due to conviction that they should provide the perfect protection in the world of financial repression we are entering.
The manager is still of this view but the sensitivity to rising rates warned about, has now been felt. He said: “This illustrates a distinction we have been labouring; investing for inflation and investing for inflation volatility are not the same thing and conflating the two will be costly. Mr Market will make us crawl through fire for the gift of redemption, and derivative protection via the unconventional toolkit remains essential to safely navigating choppy and dangerous markets. Inflation-linked bonds are now back to pre-Brexit prices – and yet in our assessment the likelihood and proximity of the inflationary denouement is much greater.”
RICA : Ruffer delivers positive returns during tough year as Baillie steps down