It is our belief that the distinctive Ruffer approach to investing fits well in two different parts of an investor portfolio.
The first is in the ‘growth alternatives’ part of a portfolio. Ruffer has been running its single investment approach since the firm launched in 1994; this approach is aligned to the investment objectives of the fund. Over the 20 years the returns of the Ruffer strategy, as represented by its funds, have been in excess of the Australian CPI +5%, combined with an annualised volatility1 of 7%2. This is the same strategy followed by the Australia fund. This means that Ruffer is well-placed to deliver on inflation-plus or cash-plus return objectives in a low-risk manner. These returns have been delivered with a correlation to global equities, adding a genuinely uncorrelated return stream to client portfolios.
We believe the Ruffer approach also sits well as a component of a more beta-heavy core portfolio. Ruffer’s track record of protecting investors’ capital through times of crisis (such as the dot.com bust and the global financial crisis) means that it provides a useful offset to more conventional equities and bonds, delivering a return that is uncorrelated during normal markets but negatively correlated during market sell-offs. Our willingness and ability to look beyond conventional assets whilst still focusing on delivering overall positive returns makes them a more effective portfolio allocation than pure tail-risk strategies (strategies that require low likelihood events to occur).
1 Volatility refers to the amount of uncertainty or risk related to the size of changes in a security's value. A higher volatility means that a security's value can potentially be spread out over a larger range of values. This means that the price of the security can change dramatically over a short time period in either direction. A lower volatility means that a security's value does not fluctuate dramatically, and tends to be more steady.
2 As at 30 April 2022. Past performance is not a reliable indicator of future performance of the fund. The performance of the fund could be significantly different to past performance. As the fund is newly formed, this is aggregated past performance information of LF Ruffer Total Return Fund, an open-ended investment company in the United Kingdom whose returns are 90%+ correlated (monthly returns) to those of the underlying fund, for the period 29 September 2000 to when the underlying fund received its first investment on July 2011 and past performance information of the underlying fund after that. The rate is shown (a) net of fees and costs that would be payable in relation to the underlying fund, (b) based on the reinvestment of distributions back into the relevant funds and (c) before tax.