Monthly Investment Report May 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 Monthly Investment Report for May 2020.

http://www.rns-pdf.londonstockexchange.com/rns/4488P_1-2020-6-9.pdf

During May, the net asset value of the Company rose by 1.3%. This compares with a rise of 3.4% in the FTSE All-Share index.

The last month has seen stock markets continue to try and put the events of March down as a bad dream with equities again moving higher. The slowdown in the level of cases in the developed world combined with some easing of lockdown restrictions has given hope that the global economy will recover and in reasonably short order. The anaesthetic of central banks stimulus has once again been sufficient to postpone all ills. As was the case in April, gold mining equities were the largest contributor to returns. The gold price only rose by 2.6% during the month, but mining equities rose in some cases by more than 10%.

Looking at the surface one would assume that not much has changed, but within equity markets there were some signs of a shift in tone. The NASDAQ, with its tilt towards technology companies, remained one of the better performing equity markets globally. It was the announcement of the proposed EU recovery fund, however, which saw some of the more 'unloved' areas of equity markets recover sharply. The Company holds its own expressions of the technology world via the likes of Ocado (+71% for the year to date) and eHealth (+36%), as well as an allocation to US healthcare, a relative outperformer. The majority of our equity exposure, however, remains in the more unfashionable areas of equity markets. These companies tend to be more geared into the real economy and this has been an uncomfortable place to be, but the tail end of the month hinted at a possible shift in market favour.

The late month rotation into more cyclical equities was apparently catalysed by the announcement of the EU recovery plan. Whilst there will inevitably be further infighting within the eurozone, and objections from those that trumpet austerity, the market regards the plan as a step toward long-awaited fiscal co-ordination. The seeming breakthrough led to the euro strengthening, and importantly allowed the US dollar to weaken, taking the pressure off some of the more vulnerable economies within emerging markets. If this rotation is 'for real', and there have been failed attempts in the past, the equity exposure in the Company will perform handsomely. If this turns out to be another false start, we should continue to see benefits from the inflation-linked bonds and gold.

The last two months have provided credence to those that believe that central banks will forever be able to control the path of asset prices. We would argue differently: in the last three months governments have adopted a wartime response of huge, debt-funded fiscal spending, aided by central bank liquidity, and in the process are dismantling the anti-inflation bias constructed after the 1970s. To us this means we could quite quickly see the inflationary consequences of deep financial repression. Such a change will likely lead to a very different (and potentially more dangerous) market environment for investors.

Enquiries:

Praxis Fund Services Limited

Gail Adams

DDI: +44(0)1481 755584

Email: [email protected]