By Val Cipriani, Investors’ Chronicle, October 10, 2023:
Ruffer Investment Company (RICA) has struggled this year, leaving investors wanting on its promise of “consistent positive returns, regardless of how the financial markets perform”. However, the popular trust’s managers have recognised their mistakes, and have been in similar situations before, raising hopes that the underperformance is no more than a blip.
The trust’s net asset value (NAV) is down by 9.5 per cent between the start of the year and 6 October, with the share price doing even worse, losing 13 per cent. As its recently published annual report to June 2023 highlighted, managers Duncan MacInnes and Jasmine Yeo did not call the timing of recession right. Ruffer is known for its consistent bearishness, but it has been blindsided by how long the consequences of rate rises have taken to show.
The managers wrote in the results that they “underestimated the willingness of the US consumer to keep spending” and said that the predominance of fixed-rate mortgage deals in the UK, and the cash savings accumulated during the pandemic, had delayed the impact of rate rises…
As a result of its weak performance, the trust went from trading at a premium and issuing shares in 2022, to trading at a discount this year. In August, the trust’s board started its first ever share buyback But James Carthew, head of investment company research at QuotedData, argued it came too late. “It could and should have acted far faster to stem the tide of discount widening,” he said. “The very modest buybacks that it has undertaken since seem to be working, with the discount now below 3 per cent versus over 7 per cent at its widest in July.”
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