Ruffer Investment Company Limited Monthly Investment Report - August 2023 (9392L)
11 Settembre 2023 - 8:00AM
UK Regulatory
TIDMRICA
RNS Number : 9392L
Ruffer Investment Company Limited
11 September 2023
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 August
2023.
http://www.rns-pdf.londonstockexchange.com/rns/9392L_1-2023-9-10.pdf
Higher global yields and fears about slowing economic growth in
Europe and China saw the major bond and equity markets decline in
August. The fund retreated, too, as market declines were not sharp
or deep enough to trigger our potent derivative protections.
No single factor drove global yields higher. Instead, a
smorgasbord of drivers included: 'higher for longer' interest rate
policies amidst persistent inflation; heavy planned US Treasury
issuance; robust US economic data; and Fitch's US government credit
rating downgrade, which highlighted the scale of the Federal
deficit - already a whopping 6.5%, with full employment! The fund's
long-dated UK and US inflation-protected bonds suffered from the
rise in yields. These should rally in the event of recession.
In Europe, flash PMIs (economic outlook indicators) pointed to a
sharp contraction. Meanwhile, China's re-opening is spluttering.
Its c $60tn property market is reeling after years of regulatory
pressure, deteriorating demography, shaken household confidence and
a broken Ponzi-esque funding model. Piecemeal stimulus measures
from Beijing have so far failed to reassure investors, but there's
little in the price for good news. We believe fatter market tail
risks from China's economy - and politics- will remain with us for
years to come. Expect surprises.
China stocks aside, equity markets' August retreat was
relatively orderly. An uneventful earnings season plus a lack of
policy or inflation shocks has kept volatility ('vol') in markets
low. That has kept the vol-targeting machine-led investment
strategies - so powerful in today's markets - invested. The fund's
small equity allocation retreated with indices but, given the
steady nature of the market decline, our derivatives have yet to
kick in, so were a small performance drag. The same goes for our c
16% position in the yen, which declined modestly despite the Bank
of Japan's relaxation of yield curve control in July. Just like the
derivatives, a significant market shock could see dramatic yen
appreciation. Our c 8% oil position was the primary positive
contributor, helped by continued OPEC supply-side discipline.
Markets still believe in a 'soft landing' - inflation dissipates
without a recession. Yet we stick to our increasingly unfashionable
belief that record monetary tightening's full impact has yet to be
felt. Locked-in low rates and faster nominal GDP growth have likely
deferred - but not de-fanged - the biting point. Even America's
remarkably robust economy is displaying cracks. Covid-era excess
savings have been spent; consumer confidence is slowing; Q2 GDP
growth and recent payrolls were revised lower; US department stores
are reporting rising credit card delinquencies.
Central banks could soon find themselves in a much trickier
situation as inflation 'base effects' and (now rising) energy
prices switch from being disinflationary tailwinds to inflationary
ones. If economies continue to slow, this could raise recession
risk by forcing central banks to stay inappropriately tight. But if
economies reaccelerate - especially in the US - it raises the
spectre of a second inflationary wave, with further rate hikes.
From our derivatives to dollars, yen to bonds, the fund remains
well-positioned for the reassertion of gravity in financial
markets, and the opportunities that will lie beyond
Enquiries:
Sanne Fund Services (Guernsey) Limited
Jamie Dodd
Email: RIC@apexfs.group
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END
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