Ruffer Investment Share Discussion Threads

[apollocreed1] 25/10/2023 12:07

@spoole5-Lol! Fully agree! I think they had no idea how good cash could be. But it's not easy for fund managers to run a fund and charge fees for just keeping your money in cash.

[spoole5] 25/10/2023 09:07

This continues to not preserve wealth!

[catabrit] 03/10/2023 18:35

Practically every smart investor I rate - one well versed in history and with a thorough understanding of inflation - is long inflation linked bonds in some capacity.

I think their bet will come good, in time.

But it might take many years, a labour government and a wider market acceptance (based on extrapolating a longer near term data set) that structural inflation is here to stay.

At the minute, governments and central bankers are saying and doing all the right things. Whether that continues in the event of revolution, riots, severe economic hardship is another matter. Just look at the massive rise in shoplifting.

But the second the authorities show their hand, you go long linkers and thus you go long Ruffer.

Until then, this could be a challenging thing to own unless we get a major drawdown. I don’t think that’s unlikely actually as I’m seeing a number of warning signs. Whether it’s the softening of the pound, the loss of momentum in the S&P 500 or a number of non-AI / tech / mega cap stocks hitting new 52-wk lows, there are plenty of data points that together signal potential danger.

Also, I just don’t think we’ve yet seen a major generational change in investor / risk behaviour that typically proceeds a correction.

Just my two cents worth.

[jellypbean] 02/9/2023 13:13

Ruffer was short conventional bonds (or an equivalent interest rate hedge). These added 7.3% to the portfolio in 2022, counteracting most of the fall in long ILGs.

I presume they have closed them at some point, as the cost of the protection may have got more expensive, and the likely outcome less assymetric.

The rise in interest rates was predictable due the the end of QE, as was /is inflation due to QE. However the timing and magnitude of both was /is not.

CGT has a policy of not shorting, though I saw in one of their video summaries last year that some of the team would have liked to have been.

PSH has probably done the beast at these low cost assymetric macro shorts in recent years. They are still (I think) short 30 year treasuries, for example), to hedge against their holdings in interest rate-sensitive stocks. They also talk about currency hedges, though you don't really get much detail on thier hedges until after the successful ones have planned out (I presume most don't).

[mwj1959] 24/8/2023 14:08

The point about the relationship between IL and conventionals is a very valid one. The only way they act as a proper inflation hedge is if you are short equivalent conventional bonds at the same time, so stripping out any price movement impact. They and the other defensive trusts got lucky in IL in the periods up to 2020. They owned them because they were concerned about a rise in inflation, but actually what happened was that we remained in a disinflationary world with buckets of QE, which dragged conventional yields lower and consequently IL ones too.

[essentialinvestor] 24/8/2023 14:01

Once again the share price snaps back when the NAV discount moves beyond a certain % -
helped by the buy back this time.

[mwj1959] 24/8/2023 13:58

And what about their foray into Bitcoin!! A profitable one mind you, but hardly a defensive asset!

[apollocreed1] 24/8/2023 12:19

Oh yeah, I forgot about Alibaba.
Just to add that it turned out in 2022, despite inflation, that cash preserved more value than bonds or stocks.

[edwardt] 24/8/2023 11:25

hmm owning alibaba does not really fit with that does it?

[the millipede] 24/8/2023 10:31

The point of this fund is to be pessimistic. It has no interest in playing the AI/tech rally and if you want to do that, don’t put all your wealth in this. Find a different fund or stocks to own in addition.

[apollocreed1] 23/8/2023 18:01

hxxps://citywire.com/new-model-adviser/news/slump-forces-ruffer-to-buy-back-shares-for-first-time-in-19-years/a2424264

[apollocreed1] 23/8/2023 17:58

2022 was the year of the crash, but losses on their inflation linked bond holdings outweighed any gains from their short option positions. I am still shocked that all 3 defensive funds didn't understand that inflation linked bonds fall in unison with standard government bonds when rates are rising.

[jellypbean] 22/8/2023 17:17

I would have thought they should do better than CGT and PNL, as RICA can use shorts etc. to benefit from falling prices. CGT won't do that, and it's hard to avoid price drops in defensives when rates are rising, without going v.short duration.
Seems RICA dropped their protection from rising rates too soon? Also there's the premium/discount thing.

[lowtrawler] 22/8/2023 16:57

appollocreed, their performance isn't very different to CGT and PNL. The wealth preservation funds are effectively all geared up for a major market crash. In the absence of a crash, they are all performing poorly. They will continue to perform poorly unless there is a crash or they decide a crash is not happening and reappraise their investments.

[apollocreed1] 22/8/2023 14:30

Their equity exposure is currently at all time lows- roughly 15%. But even within their equity holdings, they seem to all be value and commodity stocks. If you are running a multi-asset fund, doesn't it make sense to have some allocation to growth stocks? They've totally missed the AI rally in Microsoft, Nvidia, the Nasdaq etc and they seem far too slow and entrenched in their thinking to alter their strategy as the market environment changes.

[spoole5] 22/8/2023 14:25

Staggering wealth protection here

[essentialinvestor] 15/8/2023 12:33

Well hopefully an opportunity brewing again.

[jonwig] 11/8/2023 14:34

I was puzzled by RICA's dive recently and only partial recovery. Their commentaries since then haven't really been clear or convincing.

[essentialinvestor] 11/8/2023 14:05

jon, I thought it may be the well tested ...stoke nationalism as a distraction
from every day (macro) issue. Xi has as good as said they will invade, perhaps
a question of when, not if.

Longer term XI has arguably done the West a favour in making China less internationally attractive for investment.

RICA has been subject to sudden sell off this year, so I keep an eye for opportunities. Got down around 1.63 area but bounced back quickly.

[jonwig] 10/8/2023 15:27

E I - China is in a real mess economically. And any move to invade Taiwan would involve huge movement of troops, equipment, supplies, etc. The US is monitoring transportation and, from what I've seen (mostly the FT) there is no unusual activity.

[essentialinvestor] 10/8/2023 14:20

Might be worth a look in the 2.60's again. I've dipped in and out twice.

TBF I don't see this uber cautious view (even in the context of wealth preservation)
playing out - at least in the absence of some left field event... China may invade Tiwan, Russia invade another country, a new pandemic.

[jonwig] 10/8/2023 14:05

Post #640 - does a "70% correction" happen when inflation and interest rates are falling, when western banks are well-capitalised (SVB wasn't contagious), when China is inflating at minus 2% pa (cheaper exports to the west), etc., etc?

No, of course not. So what is the transmission mechanism from the world economy to a 70% fall in equities?

[pugugly] 10/8/2023 13:41

You can get 5%+ on cash - So at the moment cash is king - subject to inflation and income tak on your interest.

When and if the correction comes it will be virtually impossible to deal.

[lowtrawler] 10/8/2023 13:38

I know from experience that the price falls are far trickier to time than price increases. There is a general reluctance to accept losses or lower gains and so people hold onto assets even when market conditions say they should not. Market conditions have been flagging assets as over-priced for the past few years and yet there are record cash-inflows buying up those assets.

IMV, the general market is massively over-priced and ready to pop but I have no idea if it will happen next week, next year or take longer. When it does pop, I can easily see a 70% correction. This is why holding a balanced portfolio including asset protection funds is important.

[edwardt] 10/8/2023 12:39

they opine that nobody wants their hedges as everyone is risk on. Aside from 7 tech stocks stateside they are seeing a different picture to me