10 May 2024
RUFFER
INVESTMENT COMPANY LIMITED
(a
closed-ended investment company incorporated in Guernsey with
registration number 41966)
(the
"Company")
Attached is a link to the Monthly
Investment Report for April 2024.
http://www.rns-pdf.londonstockexchange.com/rns/8775N_1-2024-5-9.pdf
April saw the fund make good
progress despite a less friendly market backdrop. The expansion of
global liquidity that had accompanied the rise in stock markets
over the past 18 months may have started to reverse, with US bank
reserve balances held at the Fed (a basic but adequate proxy)
falling by $172bn, the largest monthly fall since September 2022.
Against this backdrop of marginally tighter liquidity, alongside
concerns over persistent inflation, it was unsurprising to see
global stock and bond market indices both falling.
Commodities provided shelter from
the April showers, with both base and precious metals benefiting
from expectations that the US economy might stay stronger for even
longer (albeit at the expense of a deteriorating fiscal position).
At the same time, the Chinese economy might be bottoming and the
geopolitical situation in the Middle East might be deteriorating.
This unusual cocktail of 'might be's' saw commodities such as gold
and oil, that often move in opposite directions, rising together in
the first half of April.
While commodity exposure drove the
fund's positive April performance, it was the silver position that
we added in March that was the single biggest contributor as it
started to catch up with the rise in gold bullion, much as we hoped
it might. Beyond silver, it was also a strong month for gold mining
stocks and our copper and oil commodity positions. We were trimming
them all as the month progressed, fully exiting the oil position as
concerns about an escalating conflict between Iran and Israel
boosted spot prices, although we have maintained some exposure to
oil related equities.
Beyond commodities, the other
notable contribution to the fund's performance in April came from
short-dated US and UK government bonds. These more than offset
losses from the long-dated UK inflation-linked bonds, which
continued to be a drag despite long-dated break-evens quietly
rising.
On the other side of the ledger, the
fund's protective position in the yen (held both via Japanese
government bonds and call options on the yen) continued to be a
significant detractor from performance, with the aforementioned
burst of enthusiasm about the US's economic prospects seeing
dollar/yen interest rate differentials again widen in favour of the
greenback. The last couple of days in the month seemed to bring
Japan's Ministry of Finance (MoF) in to play in defence of the yen,
with the MoF selling billions of dollars to discourage speculators
from taking the dollar/yen rate quickly beyond the 160 level. It is
too early to tell whether the intervention will be a definitive
change in momentum.
Current extended market positioning
in both US equities and credit is at odds with the geopolitical and
economic risks we see all around us. Furthermore, our analysis
suggests that liquidity conditions will remain challenged through
the coming months, so we are maintaining our defensive posture,
using cash and cheap derivative protection to prepare for an
environment that will eventually be more friendly to
risk-taking.
Enquiries:
Sanne Fund Services (Guernsey) Limited
Tracy Holloway
Email: RIC@apexfs.group
LEI: 21380068AHZKY7MKNO47