Ruffer Investment Company Limited Monthly Investment Report - March 2019 (3484V)
06 April 2019 - 3:13AM
UK Regulatory
TIDMRICA
RNS Number : 3484V
Ruffer Investment Company Limited
05 April 2019
RUFFER INVESTMENT COMPANY LIMITED
(a closed-ended investment company incorporated in Guernsey with
registration number 41996)
LEI 21380068AHZKY7MKNO47
Attached is a link to the Investment Monthly Report for March
2019.
http://www.rns-pdf.londonstockexchange.com/rns/3484V_1-2019-4-5.pdf
During March, the net asset value of the Company rose by 1.8%
(including the dividend of 0.9p that was paid during the month).
This compares with a rise of 3.2% in the FTSE All-Share index.
The defining feature in March has been the sharp falls in bond
yields (prices up) across developed markets. Early in the month,
the European Central Bank downgraded their forecasts for economic
growth, which immediately sent German bunds towards zero for the
first time since 2016. This move was further catalysed by the
Federal Reserve, who completed their volte-face on interest rates
in definitive fashion. As recently as September the Fed had
forecast as many as four interest rate rises in 2019, but at their
most recent meeting they implied they do not expect to raise rates
again until 2020, while financial markets are now assuming the most
likely next move is for rates to be cut. This shift is as close to
confirmation that the words from Chairman Jerome Powell in the
fourth quarter amounted to a significant error in communication,
one requiring substantial efforts to correct. This backdrop of
soothing actions and words from policy makers has given comfort to
equity markets, which ended the month at the highs for the year. We
continue to have just under 40% of the fund invested in equities,
enabling us to capture a reasonable share of the returns, whilst
continuing to hold protection should the market lose faith in the
powers of central bankers.
We have long-described a world where financial markets are too
weak to tolerate higher interests rates. The events of 2018, and
the most recent pronouncements from the Fed, have confirmed to all
market participants this is correct. The patient continues to be
reliant on the drugs, and the doctors are reluctant to see if they
can cope without. The greater the market belief in policy makers
the harder it is to control. Consider what will happen the next
time the Fed seems cornered, facing a buoyant market with loose
financial conditions and incipient inflationary pressure. The
market, sensing the Fed may wish to tighten financial conditions,
may well pre-empt Fed action and tighten financial conditions
endogenously, ie equity and credit markets will fall sharply. The
new additional risk is that if markets have been justified in their
recessionary fears, then the Fed will have to act in dramatic
fashion, they cannot risk a nine foot jump over a ten foot gap,
they need a twelve foot jump. The threshold for this is
substantial.
We have absolute conviction in our view that markets remain
structurally fragile, for which we hold protection, whilst if the
Fed have postponed the reckoning we have sufficient equities in the
fund to enjoy the remaining sunshine.
Enquiries:
Praxis Fund Services Limited
Shona Darling
DDI: +44(0)1481 755528
Email: ric@praxisifm.com
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END
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