"If you fear inflation, Ruffer Investment Company (LSE: RICA) is the fund for you," says Richard Dyson in The Mail on Sunday. This little-known investment trust is heavily invested in inflation-linked government bonds (from Britain and other countries), as co-manager Steve Russell believes indebted governments will tolerate high levels of inflation. "This will be good for national deficits but it will attack savers' assets," he tells Dyson.
Russell's primary aim is to preserve investors' capital and, if possible, generate twice the return from cash (a "sensible" level of growth, as he puts it). Generally, that would be around 10%, says Russell. Since the fund's launch in 2004, he has achieved that in annualised terms.
The fund has faced a difficult time due to its large holdings in Japan, but Russell tells CityWire it has emerged unscathed. "We've got nothing directly affected, everything [in terms of price moves] is a market reaction in terms of a sell-off. We don't have any utilities or power." Consequently, the fund's net asset value (NAV) only fell 2%-3%, despite the crisis in Japan.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
But this does highlight one problem with the trust: its popularity. Its solid performance, particularly during the financial crisis, has led to the fund trading at a 5%-or-so premium to NAV (the average since launch in 2004 has been a premium of around 1.4%), so investors may be inclined to wait for it to fall back. CityWire agrees with Dyson about the fund's quality, but notes that Ruffer's Total Return fund "does the same job and is a better bet while the trust trades at such a high value".
Contact: 020-7963 8100.
Ruffer Investment Company top ten holdings
| 1.25% Treasury index-linked 2017 | 6.0% |
| US Treasury 2.125% TIPS 2040 | 5.3% |
| 1.25% Treasury index-linked 2055 | 5.1% |
| US Treasury 1.625% TIPS 2015 | 4.7% |
| US Treasury 1.625% TIPS 2018 | 4.6% |
| T&D Holdings | 4.1% |
| CF Ruffer Baker Steel Gold Fund | 3.8% |
| CF Ruffer Japanese Fund | 3.5% |
| Ruffer Illiquid Strategies Fund | 3.0% |
| Vodafone Group | 2.9% |
-
Going part-time could leave a £58,000 hole in your pension: how to plug the gapThere are many reasons for switching to part-time work, but some savers don’t consider the impact on their pension until it is too late
-
Three bargain investment trusts to add to your portfolioThese three investment trusts are bargains compared to their net asset value (NAV), but one fund analyst thinks the deep discounts are unwarranted.
