RICL Monthly Investment Report August 2019

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 August 2019.

http://www.rns-pdf.londonstockexchange.com/rns/6716L_1-2019-9-9.pdf

During August, the net asset value of the Company rose by 0.6%. This compares with a fall of 3.6% in the FTSE All-Share index.

With economic data deteriorating further, most notably in Germany and China, and no early end in sight to the US-China trade spat, August witnessed a further stage in the seemingly unstoppable bull market in government bonds. Negative yielding government debt hit a new record of $17 trillion, and the yield on 30 year US government stock temporarily went below 2%. With gold's zero yield suddenly not so anomalous the yellow metal's price rose 8% in US dollar terms, and thus in a month of generally falling equity markets, the portfolio's gold-related investments and inflation-linked bonds were the main contributors to August's positive return.

Where to next? Having cut interest rates by 0.25% at the end of July the US Federal Reserve's Jackson Hole symposium gave little incremental clue as to the future path of interest rates. While financial markets have been quick to price in further rate reductions, the continued robustness of the US consumer, buoyed by continued jobs growth and rising wages, shows clearly the Fed's dilemma, even before taking into account the sustained volley of uncomplimentary tweets from the White House. Elsewhere, a further driver to the narrative of falling yields has been hopes for another big monetary bazooka from the European Central Bank later in September.

Regular readers will be well aware of our view that come the next economic slowdown fiscal policy will have to share in the heavy lifting, and with the UK government's 'magic money tree' coming to resemble a veritable forest, the UK seems set to lead in this respect. With a snap election seemingly avoided in Italy then some fiscal relaxation there seems reasonable to expect. Even in Germany, should the economy worsen further, there is talk of higher government spending, especially if it can be executed under the cover of climate change or a green agenda. For us all of these roads lead to the risk of higher inflation.

One final puzzle for us has been the continued robust performance of credit as an asset class. With all the talk of economic deceleration, let alone recession, one might have expected wobbles in credit as investors move to price in the risk of higher borrowing spreads or a default cycle. As yet, however, the credit market has paid much more attention to the story of lower rates than to that of lower activity. So far the poorly performing parts of the credit sphere remain idiosyncratic, but we suspect it is only a matter of time before concerns spread, and the portfolio's credit protections have their moment.

Enquiries:

Praxis Fund Services Limited

Gail Adams

DDI: +44(0)1481 755584

Email: ric@praxisifm.com