Although 2011 was ‘far from a vintage year’ for the Ruffer Investment Company, the managers of the £264 million trust said ‘there is a palpable sense of relief in having dodged a number of bullets.’
In the trust’s latest investment report, chief executive Jonathan Ruffer and investment directors Hamish Baillie and Steve Russell said running a portfolio of offsetting assets has helped dodge the bullets, by allowing the trust to hold comparatively high equity weightings with some confidence.
The managers conceded Japan took a bullet, although it was ‘one that missed vital organs.’ The trust holds 24% in Japanese equities, the trust’s largest single weighting to one asset class.
The managers said: ‘Within the portfolio index-linked bonds crept up and our US equities were also positive contributors with only a modest tailwind of 1.2% rise in the dollar.
They added: ‘We mentioned in the last review that we expect the US to be a relative outperformer and positive manufacturing data in December further endorsed this view.’
The trust, which saw its net asset value at the end of December up by 0.3% over the month at 193.45p, rose by 0.7% over the year in total return terms, compared with a fall of 6.6% in global equities.
The trust’s holdings in the US were in large defensive companies, which outperformed their smaller counterparts. Overall, the pharmaceutical company Merck & Co. was the best performer.
At the end of December, the trust’s largest holdings included 1.25% Treasury index-linked 2017 securities at 7.5% of the fund, 1,25% Treasury index-linked 2055 securities at 6.5% of the fund and US Treasury 1.625% TIPS 2018 securities at 5% of the fund.
In terms of the largest equity holdings, the trust held 3.5% in Vodafone Group, 2.6% in T&D Holdings and 2.5% in Nippon Telegraph & Telephone.
The managers said: ‘We will endeavour to maintain a portfolio that will perform come sunshine, rain (or gales) and, as ever, the battleground will be to ensure that our offsetting assets are fulfilling their role in protecting other parts of the portfolio.’
