Monthly Investment report July 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 July 2020.

http://www.rns-pdf.londonstockexchange.com/rns/5187V_1-2020-8-7.pdf

During July, the net asset value of the Company rose by 1.1%. This compares with a fall of 3.6% in the FTSE All-Share index. Year to date we are up 7.9%.

The political, economic, and societal crises rumble on. We are past the acute phase, but sticking plasters mask the extent of any chronic damage. However, Sleeping Beauty awaking from her slumber and perusing a copy of the Financial Times, might ask what all the fuss is about? Many markets have fully recovered. US stocks, sovereign bonds and investment grade credit are all now up on the year.

Unsurprisingly, this has led to discussion of whether or not there is a 'disconnect' between the stock market and the economy. Bulls would say the market has been rational through this period, as it draws a clear distinction between the best and the worst companies. Companies with pristine balance sheets are at all-time highs, those with weak balance sheets remain in the doldrums. Furthermore, the winning stocks are the ones which have benefitted from lockdown, the digital economy leaders and the predictable or subscription business models like Amazon, Peloton or Ocado (our biggest individual winner year to date). But we must consider what this is telling us.

What this implies is that investors are certain there will be no return to perceived normality. If the market and the economy are going to come roaring back to normal in a 'v' recovery, it's unlikely to be Clorox (who make sanitiser) or Zoom who benefit most.

We think if you want to play economic recovery, these are precisely the wrong sort of stocks to be in. These companies have become the new defensive assets - where investors go to feel safe. They have been highly correlated with bonds and gold. So, for our equities, we are focusing more on recovery - we want to be in Walt Disney, who can re-open their theme parks, or Vinci, who operate French toll roads.

Remember that, if GDP growth picks up, the valuation premium granted to secure growth stocks becomes unwarranted. If GDP growth does not pick up, then the economy is stuck in an extended slump and equities are probably the wrong asset class entirely. The latter scenario is where our portfolio protections would come into play - and we are beginning to dial these back up.

Meanwhile, the most important driver of markets in July was the emergence of US dollar weakness. The dollar index weakened by 4%, providing some support to reflation and recovery. The US has converged with the rest of the world at the zero lower bound and Chairman Powell has confirmed they are 'not even thinking about thinking about raising rates'.

So perhaps it is not surprising that towards the end of the month gold soared to an all-time high. Silver posted its strongest month on record. After adding to our precious metal positions in March, these have been big contributors to our portfolio over the last few months (adding 1.5% in July alone). The LF Ruffer Gold Fund is up 74% for 2020. We have trimmed these equities a little but continue to run a large exposure at around 10% of the portfolio.

Our shareholder webinar is on 17 September. Please email [email protected] for details.

Enquiries:

Praxis Fund Services Limited

Gail Adams

DDI: +44(0)1481 755584

Email: [email protected]