Investment Monthly report April 2020

RUFFER INVESTMENT COMPANY LIMITED

(a closed-ended investment company incorporated in Guernsey with registration number 41996)

LEI 21380068AHZKY7MKNO47

Attached is a link to the Investment Monthly Report for April 2020.

http://www.rns-pdf.londonstockexchange.com/rns/2754M_1-2020-5-7.pdf

During April, the net asset value of the Company rose by 5.8%. This compares with a rise of 5.0% in the FTSE All-Share index.

April was very much the yang to March's yin, with the US stock market moving from the fastest fall since the Great Depression (in March) to the largest monthly rise since 1987. Following the significant pivot in portfolio positioning in the second half of March the portfolio was able to capture much of the available upside (it is the second highest monthly return in the Company's 16-year history), whilst remaining appropriately defensively positioned. The share price rose by over 10% marking the best month in the Company's history.

Gold and gold mining equities (+3.4%) accounted for more than half of the portfolio's return. We topped up this area in mid-March as various levered retail gold miner exchange-traded funds (ETFs) imploded, leaving attractive stock prices in their wake. The miners have rebounded strongly and indeed one of the names we added to, Newmont Corp, is the best performing company in the S&P 500 so far this year, handsomely outperforming the 'FANG' names (Facebook, Amazon, Netflix and Google) that are for now the market darlings. The next largest contributor was inflation-linked bonds (+2.0%), as long-dated bond yields continued to be squashed down by the largest central bank buying programmes ever seen, followed closely by the equity allocation as a whole (+1.2%). On the other side of the ledger were the unconventional portfolio protections (-1.1%): after we took significant profits in March, these provided a lesser headwind to performance.

Where next for markets? Liquidity argues for higher prices, while economic fundamentals argue for lower prices. On the one hand, the veritable torrent of monetary and fiscal stimulus squeezes stocks and bonds higher; on the other, all the money one saves by being locked at home represents all of someone else's lost revenues. For now the balance appears to be in favour of price appreciation; we would only caution that if markets run significantly higher, politicians and central bankers may be faced with the exceptionally toxic combination of both stock markets and unemployment at record highs, and it is likely that they will amend or withdraw accommodative market policy in favour of policies that benefit workers rather than corporates.

Reflecting this and other concerns, we have over the last six weeks added more yen to the protective armoury. A number of factors argue for yen appreciation - Japan's oil imports are now much cheaper, its low interest rates are no longer such a relative rarity, and the Bank of Japan will find it hard to surpass the stimulus efforts of others given how much of the Japanese government bond (JGB) market the Bank already owns, to name just three - and this appreciation would be turbo-charged if further distress or defaults were seen in the US corporate credit market, as Japanese investors repatriate their significant investments there. Worldwide, it is the currency that looks most like gold and is therefore deserving of a significant allocation.

Enquiries:

Praxis Fund Services Limited

Gail Adams

DDI: +44(0)1481 755584

Email: [email protected]