Ruffer Investment Company Limited Monthly Investment report July 2020 (5187V)
07 August 2020 - 9:45PM
UK Regulatory
TIDMRICA
RNS Number : 5187V
Ruffer Investment Company Limited
07 August 2020
RUFFER INVESTMENT COMPANY LIMITED
(a closed-ended investment company incorporated in Guernsey with
registration number 41996)
LEI 21380068AHZKY7MKNO47
Attached is a link to the Monthly Investment Report for July
2020.
http://www.rns-pdf.londonstockexchange.com/rns/5187V_1-2020-8-7.pdf
During July, the net asset value of the Company rose by 1.1%.
This compares with a fall of 3.6% in the FTSE All-Share index. Year
to date we are up 7.9%.
The political, economic, and societal crises rumble on. We are
past the acute phase, but sticking plasters mask the extent of any
chronic damage. However, Sleeping Beauty awaking from her slumber
and perusing a copy of the Financial Times, might ask what all the
fuss is about? Many markets have fully recovered. US stocks,
sovereign bonds and investment grade credit are all now up on the
year.
Unsurprisingly, this has led to discussion of whether or not
there is a 'disconnect' between the stock market and the economy.
Bulls would say the market has been rational through this period,
as it draws a clear distinction between the best and the worst
companies. Companies with pristine balance sheets are at all-time
highs, those with weak balance sheets remain in the doldrums.
Furthermore, the winning stocks are the ones which have benefitted
from lockdown, the digital economy leaders and the predictable or
subscription business models like Amazon, Peloton or Ocado (our
biggest individual winner year to date). But we must consider what
this is telling us.
What this implies is that investors are certain there will be no
return to perceived normality. If the market and the economy are
going to come roaring back to normal in a 'v' recovery, it's
unlikely to be Clorox (who make sanitiser) or Zoom who benefit
most.
We think if you want to play economic recovery, these are
precisely the wrong sort of stocks to be in. These companies have
become the new defensive assets - where investors go to feel safe.
They have been highly correlated with bonds and gold. So, for our
equities, we are focusing more on recovery - we want to be in Walt
Disney, who can re-open their theme parks, or Vinci, who operate
French toll roads.
Remember that, if GDP growth picks up, the valuation premium
granted to secure growth stocks becomes unwarranted. If GDP growth
does not pick up, then the economy is stuck in an extended slump
and equities are probably the wrong asset class entirely. The
latter scenario is where our portfolio protections would come into
play - and we are beginning to dial these back up.
Meanwhile, the most important driver of markets in July was the
emergence of US dollar weakness. The dollar index weakened by 4%,
providing some support to reflation and recovery. The US has
converged with the rest of the world at the zero lower bound and
Chairman Powell has confirmed they are 'not even thinking about
thinking about raising rates'.
So perhaps it is not surprising that towards the end of the
month gold soared to an all-time high. Silver posted its strongest
month on record. After adding to our precious metal positions in
March, these have been big contributors to our portfolio over the
last few months (adding 1.5% in July alone). The LF Ruffer Gold
Fund is up 74% for 2020. We have trimmed these equities a little
but continue to run a large exposure at around 10% of the
portfolio.
Our shareholder webinar is on 17 September. Please email
events@ruffer.co.uk for details.
Enquiries:
Praxis Fund Services Limited
Gail Adams
DDI: +44(0)1481 755584
Email: ric@praxisifm.com
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END
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