13 June 2024
RUFFER
INVESTMENT COMPANY LIMITED
(a
closed-ended investment company incorporated in Guernsey with
registration number 41966)
(the
"Company")
Attached is a link to the Monthly
Investment Report for May 2024.
http://www.rns-pdf.londonstockexchange.com/rns/2215S_1-2024-6-12.pdf
Positive corporate earnings, easing
geopolitical tensions, and better inflation data in the US helped
equities and bonds rise in May. Investors pivoted from fears of a
reacceleration (which drove April's sell-off) back to hopes of a
benign disinflation, albeit at a slower pace than was expected at
the start of the year. The Federal Reserve all but ruled out
interest rate hikes at their May meeting, pushing equity indices
back to all-time highs. However, the latter half of May was less
friendly to asset prices as we saw yields rising, some sector
weakness in equity markets and volatility moving off its
lows.
The fund protected investors in
April as markets fell and it continued to deliver positive
performance in May. Precious metals exposure (to which we added,
and then took profits within the month) delivered a strong
contribution as silver and platinum rallied 16% and 11%
respectively. Chinese stocks were mixed but individual holdings
such as Alibaba delivered gains alongside tech (where we have some
exposure via TSMC and Amazon). In fixed income, we rotated part of
our UK inflation-linked bond exposure into US 10 year
inflation-linked treasuries (TIPS), which proved helpful as yields
have remained higher in the UK following a hotter inflation
print.
Our derivative positions detracted
from performance - namely the credit protections, as corporate
spreads tightened. After four consecutive positive months, oil fell
7% in May, as geopolitical tensions eased. This hurt the fund's
energy equities. The portfolio's yen and US dollar exposure also
dragged on performance, as sterling strengthened following the
announcement of a general election that could deliver some
political certainty, amidst signs of a more robust UK
economy.
Acknowledging that equity markets
had weathered the April showers and the passing of several risk
events (inflation and labour market data, Bank of Japan
intervention, liquidity contractions), we have slightly increased
the gross risk of the portfolio. We added about 5% to our equity
exposure, took the position in 10 year TIPS to over 11% and made
further additions to precious metals. To maintain portfolio
balance, we also added to the protective assets in the portfolio.
Given spreads remain near record lows, despite signs of weakening
economic fundamentals in the US, we increased our credit
protection. We also took on more yen exposure, viewing it as a
two-way asset that can work in a benign environment of falling US
yields, or as powerful protection in a risk-off event.
Whilst some position sizes in the
portfolio are now higher, we remain cautious overall. We maintain
conviction that the path for a soft landing is narrow, as we head
towards a summer of uncertainty driven by elections, central bank
policy decisions, liquidity risks, and a softening US economy.
However, attractive risk-reward can be found in growth assets
across certain geographies and sectors, whilst the cost of
protection remains at multi-decade lows. This all helps in building
a balanced portfolio of offsetting and asymmetric
assets.
Enquiries:
Sanne Fund Services (Guernsey) Limited
Tracy Holloway
Email: RIC@apexfs.group
LEI: 21380068AHZKY7MKNO47