To achieve a positive total annual return, after all expenses, of at least twice the rate of Bank of England Bank Rate.
We seek to achieve this objective in both good markets and bad – which is why we also refer to our investment approach as ‘all-weather’. The focus of our investment strategy is on capital preservation. We constantly ask ourselves ‘what could go wrong?’, ‘how could we lose money?’ and position the portfolio to offset these risks. The advantage of not losing money is threefold –
Full details on Ruffer’s approach to responsible investing can be found here and at the Association of Investment Companies. Our aim is to be good stewards of our investors’ capital and we do this by integrating ESG considerations into our investment process and the operation of the Company.
We are active shareholders and vote on all shareholdings within the Ruffer Investment Company, engaging with the management of our investee companies to help them and suggest change when necessary. If engagement is unsuccessful, we may disinvest from a company if we feel it is in our shareholders’ best interests to do so.
Ruffer has a dedicated Responsible Investment team, which manages all engagement activity and forms an integral part of the research process. Details of all engagement activities are available here.
The level of the dividend is set by the Board of the Ruffer Investment Company. The policy is to distribute more than 85% of the net income received from our investments each year. The Board also has a policy of not using capital to maintain the level of the dividend, seeing this to be a contradiction of our capital preservation objective. The Board has not asked Ruffer to target a certain level of income, as this might have the perverse impact of forcing the Manager to put investors’ capital at greater risk. Instead, the Board asks Ruffer to achieve the Company’s investment objective on a total return basis – through a combination of capital growth and income.
The Board does not consider it beneficial for long term shareholders for the Company’s shares to trade on a large premium, so the Company will issue new shares if there is a significant and sustained premium. Issuance will always be done at a small premium so it benefits existing shareholders. Share issuance has the added benefit of improving liquidity in the trading of the shares, and reducing the Company’s fixed costs per share. Share buybacks operate in a similar fashion. It is not in shareholders’ interests for the shares to trade on a significant and sustained discount, so the Board will look to buy back shares if this situation arises. This will always be done at a level which benefits continuing shareholders.
Every year at the Company’s annual general meeting, shareholders have the option to vote on the buyback and issuance authority. The Board also retains the ability to provide shareholders with a redemption opportunity each year. Given the Company’s shares have rarely traded at a significant and sustained discount, this has only been used once, in 2007, when 17% of the outstanding shares were redeemed at net asset value.
There are no ordinary shares in issue. The Company’s preference shares carry voting and dividend rights in the same way as most ordinary shares.
Under the terms of the Company’s investment policy, the Directors have imposed certain restrictions on how the Company’s assets can be invested. Full details can be found in the Investment Policy Statement. The principal restrictions are that not more than 15% in aggregate (at the time of investment) will be held in 1) companies based in emerging markets and 2) other listed investment companies, and not more than 25% in aggregate (at the time of investment) will be held in collective investment schemes.
The Company’s shares are traded on the London Stock Exchange, but unlike open-ended funds, new shares are not created/redeemed each time someone buys or sells. Each week the Company will release the current net asset value (NAV) – effectively the value of the Company’s underlying assets. The share price can be different from the NAV per share (ie trade at a discount or premium). This comes with risk and opportunity: if you buy the shares on a discount and they move to a premium, your return will be greater than the change in NAV per share. If you buy on a premium and they move to a discount, your return will be less than the change in NAV per share.
Investment companies represent a permanent pool of capital for investment, so the Manager has the advantage of being able to invest for the long term, without having to mange cash flows in and out of the Company. Outflows can force a Manager to sell investments at an inopportune moment and significant inflows can dilute the benefit from existing investments.
An investment company has a Board of independent directors, whose job is to act in the best interests of the Company and therefore protect shareholder interests. For the Ruffer Investment Company, the Board does not manage the investments, but they scrutinise the Manager (Ruffer) and hold all the service providers to account. They will also decide on dividends, buybacks and other corporate matters.
No. While there is the ability for the Company to borrow, the Directors have chosen not to use this facility, feeling it would contradict the capital preservation investment objective. The effect of gearing is to enhance returns on the way up, but it also amplifies losses on the way down.
The Board supports the recommendations of the Davies Report and notes the recommendations of the Parker review into ethnic diversity and the Hampton-Alexander review on gender balance. Currently 40% of the Directors on the Board are women. The Board will also monitor the approach to diversity and inclusion of all its service providers, including Ruffer.
We also participate in the Guernsey Non Executive Director Apprentice program, which was established to develop and diversify the talent pool for recruiting directors in Guernsey and provide opportunities for individuals to gain practical experience sitting on the boards of Guernsey domiciled companies.
Information on how to invest is available here.