Ruffer Regulatory News (RICA)

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