15
November 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 October 2024:
http://www.rns-pdf.londonstockexchange.com/rns/4104M_1-2024-11-15.pdf
October was a tough month for both
bond and equity markets, and the fund was not immune. Bonds had
their worst month since September 2022 as investors grappled with
the prospect of fiscal expansions in the US, the UK and China
potentially putting upward pressure on inflation over the next few
years. This, combined with better-than-expected economic data in
the US, saw investors dial back their expectations for rapid rate
cuts in 2025.
With an election in Japan injecting
uncertainty into yen rates at the same time as dollar rates were
rising, the market was emboldened to resume selling the yen. This
led to yen weakness being the biggest detractor from portfolio
performance in October. However, our conviction in the value on
offer is undimmed, and we took advantage of the recent weakness to
re-establish call options on the yen (derivative positions that
will increase in value if the yen rises strongly) to complement our
existing direct exposure to the currency. Inflation remains a key
political issue in Japan. The Bank of Japan, which kept rates low
as other central banks were hiking in 2022-2023, is now raising its
rates as other central banks are cutting, and despite the October
setback, we expect this interest rate convergence to keep upward
pressure on the yen into 2025.
Although we took some profits in our
Chinese equities in early October, they were the main detractors
within our equity book because of dollar strength, the growing
anticipation of a Trump presidency (with its promise of high
tariffs on Chinese goods) and some half-hearted follow through on
domestic stimulus in China. Chinese equities are widely under-owned
and, on aggregate, trade near trough multiples of what we suspect,
in the context of continuing domestic stimulus, are near-trough
earnings.
Beyond the Chinese equity trim and
the yen increase, the other notable action in the portfolio was the
reintroduction of a position in silver bullion. Having traded in
and out successfully earlier in the year, we built the position
back during October, ending with 2% of the fund exposed to silver.
This and the 1% of the fund exposed to platinum complement our gold
equity holdings. These all historically trade with a high beta to
the gold price (when the gold price is rising they typically rise
more, and when it is falling they fall more). So far in 2024,
silver and gold equities have traded in line with gold bullion, so
if the bull market in gold continues, the possibility of outsized
returns remains.
At the point of writing, Donald
Trump has just been elected president of the US, and the coalition
governing Germany has collapsed. We see both events as paths to
greater fiscal profligacy on either side of the Atlantic. UK
Chancellor Reeves' own fiscal stimulus was unveiled at the end of
October, at a Budget that was fueled by more debt as much as by
higher taxes. We are keeping a close eye on funding spreads and
real interest rates across these markets. If they rise too high too
fast, a lot will have to change. First, bond and equity markets
will have to fall, and then policies will have to be reappraised,
but in that order. The fund remains defensively positioned in
anticipation.
Enquiries:
Sanne Fund Services (Guernsey) Limited
Company Secretary
Nicole Liebenberg
DDI: +44(0)20 3530 3653
Email: ric@apexfs.group
LEI: 21380068AHZKY7MKNO47