Ruffer Investment Company Limited Monthly Investment Report - May 2019 (6671B)
June 10 2019 - 5:05AM
UK Regulatory
TIDMRICA
RNS Number : 6671B
Ruffer Investment Company Limited
10 June 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 May
2019.
http://www.rns-pdf.londonstockexchange.com/rns/6671B_1-2019-6-10.pdf
During May, the net asset value of the Company fell by 0.8%.
This compares with a decline of 3.0% in the FTSE All-Share
index.
After four months of a strong recovery, the month of May
fulfilled its seasonal tradition as equity markets declined across
the globe. There was no shortage of reasons for investors to take
fright: escalating trade tensions with China, presidential tweets
on Iran and Mexico, potential anti-trust probes into tech stocks
and a resolutely backward sloping yield curve that may or may not
foretell a recession to name just a few. So the main global markets
fell about 6% with emerging markets faring somewhat worse.
Meanwhile in the UK, if anything sentiment declined even further
in May. European elections, unplanned and unwanted, saw support for
the main political parties eviscerated as voters plumped for either
the Brexit Party or those supporting a second referendum in almost
equal numbers. This merely confirmed that the country remains
entirely divided on the issue. Prime Minister May's resignation
hardly helped, with sterling falling as her potential successors
compete to see who can shout loudest for a hard exit. Meanwhile,
the spectre of a general election has loomed back into view,
bringing with it fears of a Corbyn government and what that might
mean for domestic investors and business.
Unsurprisingly, it was 'fear' assets that fared best in the
month. Falling bond yields boosted our index-linked bonds, with
positive contributions also coming from our credit protection and
gold. Among our equities, trimmed back to about 37% earlier in the
month, oil and industrials were hit hardest, giving back some of
the previous quarter's gains.
All in all a veritable litany of woes to support the old adage
of 'sell in May and go away' despite the ever present supporting
chorus of the US Federal Reserve behind asset prices. However our
concern remains that the problems go rather deeper than just
domestic politics and presidential tweets. 'Free money' (near zero
interest rates) and ever increasing debts have distorted markets.
Like some 21st century fairy tale, the proportion of US IPOs for
loss-making companies has now exceeded the record set in the tech
bubble. When debt and money have no cost, capital misallocation
always ensues, and if the punchbowl is not removed, inflation
follows. Increasingly we see shades of 1999-2000 in stock markets,
not just in 'Unicorn' IPOs but also in the matching record levels
of abhorrence of value compared to profitless growth. Meanwhile
global politics isn't changing - it has changed, we just haven't
seen the results yet. Against all this our index-linked bonds, gold
and credit protections stand guard. Are we too gloomy? Perhaps, and
our equities are an insurance against this. But our role is to hold
positions on the contrary side of manias - the assets that
investors panic into when bubbles burst - and this increasingly
looks and feels like a bubble to us.
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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