16 July 2024

RUFFER INVESTMENT COMPANY LIMITED

(a closed-ended investment company incorporated in Guernsey with registration number 41966)

(the "Company")

Attached is a link to the Monthly Investment Report for June 2024.

http://www.rns-pdf.londonstockexchange.com/rns/5591W_1-2024-7-16.pdf

The fund fell back marginally over the month as equity markets continued to move higher, albeit in increasingly narrow fashion. Over the month, the board have also continued their buybacks, in the six months to 30 June 2024 the board have purchased 25.4 million shares for a total of around £68.2m which equates to 6.6% of the shares outstanding. These purchases have added 0.4% to the company NAV.

The S&P 500 was up 4% over the last month, whilst the same index equal-weighted was down by 1%, this is illustrative of a world of fewer winners and more losers. There is an adage that when markets are broad, they are strong, but when they are narrow, they are weak.

Over the past nine months we have managed to maintain a level of protection in portfolios we believe will be essential when market conditions deteriorate. But in contrast to the second quarter of last year, the growth assets have contributed to ensure that the fund isn't retreating in the intervening period. This has been driven by proactive portfolio adjustments. Adding duration in the fourth quarter gave us a positive year end; an increased equity weighting and dynamic management of the portfolio's commodity exposure have supported returns this year.

There is something of a dichotomy at play in markets; many investors express concerns but these are not yet reflected in their positioning. In a recent Bank of America Fund Manager survey 69% of respondents consider the 'Magnificent 7' to be the most crowded trade in markets, meanwhile about half of those respondents expect large-cap US growth stocks (dominated by the same seven names) to lead the market higher. There is no telling how much crossover there was from individual respondents, but it indicates a market displaying both uncertainty and great confidence in a benign outcome, given the level of valuations. This is a potentially dangerous combination, particularly when positioning is increasingly extreme in nature (and when leverage is involved).

Our predominant contention in the short term is that investor positioning is yet to adjust to reflect higher risk-free rates. Investors are currently paid more than 5% to not take risk. Meanwhile, risk premiums (the additional return an investor should receive for coming out of cash) are low, particularly in the US. It might be the case that conditions remain benign, but the potential upside of that outcome is limited. This informs our continued focus on ensuring that the portfolio is well positioned to make money should the certainties break and take advantage of the opportunities any sell-off presents.

The yen remains a key protection; we see many reasons for the yen to strengthen, but key to its role in the portfolio is that if the yen is strengthening it is likely to be against a backdrop of financial stress. Credit spreads give us exposure should the current compressed nature of risk premiums reverse. If liquidity is less readily available, a significant re-pricing of corporate debt is likely. We must also remain conscious of the need to participate should the current benign environment persist; the combination of a 25% allocation to equities, a recently increased position in oil plus exposure to gold mining equities, should allow us to participate, but without compromising our capital preservation mandate.

Enquiries:

Sanne Fund Services (Guernsey) Limited

Tracy Holloway

Email: [email protected]

LEI: 21380068AHZKY7MKNO47