TIDMRICA
RNS Number : 5938Q
Ruffer Investment Company Limited
01 March 2021
RUFFER INVESTMENT COMPANY LIMITED
(a closed-ended investment company incorporated in Guernsey with
registration number 41996)
LEI 21380068AHZKY7MKNO47
1 March 2021
HALF-YEARLY FINANCIAL REPORT
The Company has today, in accordance with DTR 6.3.5, released
its Half-Yearly Financial Report for the six months ended 31
December 2020 and is attached.
http://www.rns-pdf.londonstockexchange.com/rns/5938Q_1-2021-2-26.pdf
The Half-Yearly Financial Report is also available via the
Company's Investment Manager's website www.ruffer.co.uk .
Enquiries:
Praxis Fund Services Limited
Shona Darling
DDI: +44(0)1481 755528
Email: ric@praxisifm.com
Key performance indicators 31 Dec 20 % 31 Dec 19 %
===================================================== ============== ==============
Share price total return over six months [1] 9.1 3.8
NAV total return per share over six months 1 6.4 3.3
Premium/(discount) of traded share price to NAV 0.9 (3.5)
Dividends per share over six months [2] 0.95p 0.90p
Annualised dividend yield [3] 0.7 0.8
Annualised NAV total return per share since launch 1 7.5 7.2
Ongoing charges ratio [4] 1.09 1.07
===================================================== ============== ==============
Financial highlights 31 Dec 20 30 Jun 20
===================================================== ============== ==============
Share price 263.00p 242.00p
NAV as calculated on an IFRS basis (5) GBP472,446,344 GBP444,112,381
NAV as reported to the LSE GBP471,058,880 GBP444,389,282
Market capitalisation GBP475,473,534 GBP437,507,967
Number of shares in issue 180,788,416 180,788,416
NAV per share as calculated on an IFRS basis [5] 261.33p 245.65p
NAV per share as reported to the LSE 260.56p 245.81p
===================================================== ============== ==============
Chairman's review
It is a privilege to have succeeded Ashe Windham as Chairman of
the Company and we all wish him well for the future. Ashe joined
the Board of Ruffer Investment Company Limited (RICL or 'the
Company') in 2009 and became Chairman in 2011. During his tenure as
Chairman the total return on the Company's shares was 37.5% and
there was significant change, including a new Board, a new broker
and a new administrator. Ashe has left the Company in a strong
position, at a peak of market capitalisation and with a
significantly lower ongoing charges ratio (OCR).
Performance
Lenin said about the year 1917: "there are decades where nothing
happens and there are weeks where decades happen". The same was
true of 2020. Many financial assets moved more in weeks than they
had previously in decades and covid-19 created, or at least
furthered, a revolution in a number of areas of commercial,
environmental and social life.
RICL achieved its investment objectives in 2020 with colours
flying. Over the six months under review the Company's published
net asset value (NAV) rose from 245.81p to 260.56p, providing a net
asset total return of 6.4%. The share price appreciated from 242p
to 263p which, together with the dividends, gave a shareholder
total return of 9.1% for the six months, helped by the movement
from a small discount to a modest premium over the period.
The 2020 calendar year share price return of 17.8%, and NAV
return of 13.5%, contributed to a compound annual NAV return of
7.5% since the Company listed in 2004, compared to 6.8% per annum
from the FTSE All-Share Total Return Index.
Ruffer's investment strategy, since before the launch of your
Company, has now produced a positive return in the three major bear
markets since the firm began in 1994, making money for investors in
2000-2003, 2008 and in 2020. The compound annual return for the
strategy is 8.9% after fees with a maximum drawdown of less than
10% compared to a maximum of 48% for the FTSE All-Share Index.
Risk
An American economist named Frank Knight wrote, back in 1921:
"if you don't know for sure what will happen, but you know the
odds, that's risk, and if you don't even know the odds, that's
uncertainty." The future is nearly always uncertain and the past is
no guide to the future. However, while history does not necessarily
repeat itself, it does tend to rhyme and the results can be
measured.
One measure of risk is deviation from an average historical
return. More risk should equate to more return, but two portfolios
can have identical annual arithmetic average returns over the same
period with different wealth outcomes depending on risk. For
instance, a portfolio which achieves a mean annual return of 10%
over ten years with no volatility will accumulate one fifth more
wealth than a portfolio with exactly the same average return but
where the return deviates by 20% in two years out of three. For
perspective, 20% was the volatility of UK equities over the span of
the twentieth century.
The RICL return is not only achieved with the lowest risk of all
the funds but with the highest percentage return for every extra
percentage point of risk taken.
The Sharpe ratio quantifies the Company's performance relative
to a risk-free investment, taking account of any additional risk.
The Sortino ratio measures only the downside element of the
volatility. The Sortino numbers show that the Company has generated
nearly three times more excess return per unit of downside risk
since its inception than an investment in the UK stock market.
To 31 December 2020 Sharpe ratio Sortino ratio
------------------------------------------------------- ------------- --------------
Ruffer Investment Company since inception (July 2004) 0.89 1.99
FTSE All-Share Total Return Index since July 2004 0.43 0.69
------------------------------------------------------- ------------- --------------
FTSE All-Share index in GBP. Source: Factset. Ruffer Investment
Company data is Total Return NAV. All data measured to 31 December
2020.
Investment objective
The Company is classified as part of the flexible investment
sector, which has many different benchmarks, although many
different funds in the sector have none. The Company has no
index-related benchmark, but its principal objective is: 'to
achieve a positive total annual return, after all expenses, of at
least twice the Bank of England Bank Rate'. The aim is to create an
'all-weather' portfolio which combines growth and protective
investments to provide consistent positive returns regardless of
the performance of financial markets. In the words of Jonathan
Ruffer, the approach is about trying not to be wrong, rather than
attempting to be right.
Bank Rate is just one of the tools of monetary policy set by the
Monetary Policy Committee of the Bank of England to maintain price
stability and support the government's economic policy. Bank Rate
determines the interest rate paid to commercial banks holding money
with the Bank of England as part of their liquidity requirements.
By influencing the rates which those banks charge for lending, Bank
Rate affects economic activity and the valuation of assets. It is
used as a tool to encourage growth, as now, and control inflation
to preserve the value of money as in the 1970s.
Even during the gold standard days of the nineteenth century,
Bank Rate ranged between 2% and 10%. The highest rate ever seen was
17% in 1979, when it was known as minimum lending rate. By the time
RICL was launched in June 2004, the rate had fallen to 4.5%.
Returning twice 4.5% while trying to avoid significant drawdowns
was a testing target given the volatility of equities or
equity-related securities and bonds in which the Company is
predominantly invested.
Simple but not easy
Since February 2009, Bank Rate has been no higher than 1%, the
lowest nominal rate since the Bank of England was founded in 1694
until falling to the current 0.1%. Twice bank rate as a target
might seem simple but is not always easy. Cash maintains capital
value, carries minimal risk; its return is highly predictable in
the short term and it is accessible. In the long term, cash returns
have been close to the inflation rate, in fact 1% above it over the
twentieth century.
However, the valuation of the assets in which the Company
invests is not just determined by the nominal rate of interest but
the rate relative to inflation or deflation - the real rate. When
measured against the Retail Price Index since 2009, Bank Rate has
been negative in real terms in every single year, just as it was
positive in every one of the previous ten years. This negative real
rate both reduces the universe of return-enhancing safe-haven
assets available to achieve the Company's investment objective and
encourages taking risk.
Furthermore, it is not the rate but a change in rate, especially
unanticipated change, which has the greatest impact on the
valuations of the assets in which the Company invests and therefore
on returns in the short term. Bank Rate is a blunt instrument of
monetary policy. It has only a lagged impact on inflation and the
real economy, but can have a dramatic effect on financial
markets.
The present value of assets is also a function of future income
discounted at rates of interest related to Bank Rate. Growth
discounted at low rates of interest creates high present values of
long duration assets such as long dated bonds and growth equities.
These valuations can remain high and become higher if growth or low
interest rates are sustained beyond expectation. And they become
vulnerable to any sustained change in the direction or amount of
earnings growth, of monetary or of fiscal policy.
Marginal changes in low rates can make valuations volatile,
while the cost of protection against that volatility remains
relatively high in a low return environment. It may be
counter-intuitive, but a consistent positive return of twice Bank
Rate has rarely been a more challenging target especially given the
implied low level of downside risk. There will be times when the
Company far exceeds its target but other times when standing still
will be an achievement.
Share buy-backs
Although the Company has never yet used the permission of
shareholders to buy back its own shares (the redemption in 2007 was
technically a tender offer at NAV rather than a buy-back), it
subscribes to the Association of Investment Companies (AIC)
Corporate Governance Guide for Investment Companies (the AIC Code).
This code, which is endorsed by the Financial Reporting Council,
imposes a duty on the Board of Directors to monitor and take action
to address discounts to NAV. The AIC Code explicitly references
buy-backs as one such tool with which to do so.
In July 2020, the AIC published a paper in response to the
Pensions & Investment Research Consultants Ltd (PIRC), a
corporate governance and shareholder advisory group, on what PIRC
views as the circularity of capital which they believe is not to
the long-term advantage of shareholders. PIRC shows that a number
of trading companies have issued capital and within weeks or even
days sought authority to buy back shares and vice versa.
PIRC applies the same argument to investment companies. It
maintains that a discount to NAV is largely a product of the
management fee. PIRC's hypothesis is that the NAV of an investment
company represents the present value of the market's expected
future stream of income and gains or losses from its underlying
investments, while the share price of that company represents the
NAV less the present value of any future expected charges. The
assumption is therefore that if there were no future charges then
there would be no discount of share price to NAV.
The AIC paper recommends that PIRC distinguishes between
investment companies and trading companies and suggests that
buy-backs can be an appropriate mechanism to control discount
volatility and deliver shareholder value.
Empirical evidence
With the help of our broker, Investec, we have investigated the
empirical evidence of the correlation between ongoing charges and
the average discount to NAV of the entire investment company
population. The statistic (R-squared) which indicates the extent to
which one of those two variables could explain the other is not
significant at less than 6%. This statistic implies that factors
other than charges explain at least 94% of any correlation between
investment company ongoing charges and share price discounts to
NAV.
Further analysis showed that some investment companies have
sustained a premium of share price to NAV for long periods of time
despite costs of management. Some trusts with lower operating costs
than others have had higher levels of discount. Discounts for the
same company have varied significantly between time periods when
the management charges have not. This was especially the case
during market disruptions, such as in 2007/2008 and March 2020,
when discounts increased substantially.
Apart from this empirical evidence, it is a mathematical fact
that buying back shares at a significant discount and cancelling
them increases NAV for the remaining shareholders, although at some
point shrinking the company size would lead to a higher ongoing
charge and less marketability in the shares. There is also evidence
that buying shares into treasury and reissuing can help liquidity
in the shares, which shareholders also value.
The conclusion from the empirical analysis is that PIRC's
working hypothesis, that discounts are 'largely a product of the
management fee', does not in fact work. Management fees may be one
of a number of factors. Other factors might include both absolute
and relative performance of the fund or underlying asset class;
expectation of future returns, dividend yield, cover and
sustainability; manager depth and resource; marketability of
shares; discount control; and confidence in the Board. However,
there appears to be no evidence to support the hypothesis that fees
and charges are the main factor in explaining discounts of share
price to NAV.
Your Directors sought shareholder permission at the annual
general meeting (AGM) in December 2020, as they do each year, to
repurchase up to 14.99% of the issued preference shares during the
12 months to the next AGM. Shareholders voted 99.96% in favour of
the resolution. In the case of your Company, the Board is alerted
by our broker to any discount of share-price to NAV greater than
mid-single digits. At that point we might expect some investors to
trade the discount, taking a view on it narrowing and compounding
positive underlying performance. Others may arbitrage between the
Company's shares and units in the equivalent Ruffer open-ended
fund.
The Board assesses with the broker the market position in the
shares: who are the sellers; what are their reasons; what are
volumes which are moving the share price significantly relative to
the average liquidity levels; where are and what constitutes
potential buyers and at what price level. The Investment Manager is
not appraised of this discussion because of potential conflict of
interest should they choose to buy the Company's shares for their
discretionary clients.
The Board makes its own independent judgement on whether it
deems the discount to be a temporary aberration, offering the
opportunity to add value to shareholders through buyback, or a
longer-term signal for which action other than a share buy-back may
be required.
Reporting to shareholders
The annual report will elaborate on Ruffer's environment, social
and governance (ESG) policies which have been a focus of the
Board's attention and are well documented on the Ruffer website. We
are pleased to report continued good progress and many examples of
Ruffer acting as a leader in this area. This view was endorsed by
the latest Assessment Report from the UN-supported network of
investors promoting sustainable investment known as Principles for
Responsible Investment (PRI) where Ruffer scored A+ (the highest
grading) for their overall ESG strategy and governance
framework.
One of the revolutions which covid-19 has furthered is digital
communication. It has been a feature of some companies, not least
those resident in Guernsey, that AGMs have never been easy for
shareholders to attend. For many during lock-down under covid-19 it
has been impossible.
Covid-19 has shown that technology can mitigate communication
issues, as already demonstrated by Ruffer webinars and Ruffer
Radio. Your Board and the Investment Manager are considering how to
open the AGM virtually later this year to all shareholders who have
appropriate internet access. More on this in the annual report.
Earnings and dividends
Earnings for the half year were 0.93p per share on the revenue
account and 15.69p per share on the capital account. The Company's
investment strategy continues to focus on total return to achieve
its objective. Income remains a by-product of this process, given
the high level of investment in assets which themselves offer
little or no income. Such net income as arises will be distributed,
but capital will not be drawn on to maintain the dividend. However,
the Company is carrying retained revenue earnings of approximately
GBP2 million, which the Directors may use to supplement future
dividends should they consider it appropriate to do so.
Déjà vu
The focus of government policy in 2021 will likely continue to
be to avoid the economic and social deflationary abyss of the
1930s. Markets are clearly discounting this outcome but what policy
follows, after the expected fiscal and vaccine-induced recovery,
will be the issue for 2021 and beyond.
Whether one subscribes to classical economic thinking or to
modern monetary theory (MMT) - which some believe to be neither
modern, nor monetary, nor theory, but hypothesis - both have points
in common. Both acknowledge that once fiscal policy absorbs
unemployed resource with continued growth in money, then inflation
becomes the most likely outcome, inducing a government policy
response of higher taxation and rates of interest.
John Maynard Keynes wrote in 1923: "a change in the value of
money, that is to say in the level of prices... has produced in the
past, and is producing now, the vastest social consequences...
which generally affect different classes unequally, transfers
wealth from one to another, bestows affluence here and
embarrassment there...". Plus ça change.
Political recognition of this inequality and its cause is only a
matter of time. But until general economic recovery and the signs
of inflation are well set, governments and central banks will
likely be echoing the prayer of St Augustine: "Lord make me pure
but not yet."
The Company's strategy recognises that we are moving into a new
investment regime. Ruffer's success during 2020 in managing
different and unexpected market scenarios is encouraging for 2021.
Your Board is confident that the portfolio will continue to provide
'all-weather' portfolio diversification and protection of
wealth.
Christopher Russell
26 February 2021
Investment Manager's report
Performance review
For the six months to 31 December 2020 the NAV return was 6.4%
(2019: 3.4%). The share price return of 17.8% and the NAV return of
13.5% for the calendar year 2020 marks two consecutive years of
good returns for shareholders (+23.0% in NAV performance over 2019
and 2020) following a lean period in the two years before that.
What most people will find surprising about 2020 is that through
a severe global recession, most assets ended up making money. This
is hard to reconcile with the lived experience of 2020. Despite the
rise in asset prices, the portfolio objective of preserving
shareholder capital was thoroughly tested as we experienced the
broadest possible range of market and economic environments. We
often describe the Ruffer investment approach as 'all-weather' and
there was certainly a wide variety of investment weather to deal
with.
There were three distinct phases of market behaviour, each of
which required a different asset mix to navigate successfully.
Period Environment RIC TR NAV FTSE All-Share FTSE All World
% TR % TR %
-------- ----------------------- ---------- -------------- --------------
Q1 Covid crash -0.7 -25.1 -20.0
======== ======================= ========== ============== ==============
Q2+Q3 Stimulus led reflation +8.0 +7.0 +26.6
======== ======================= ========== ============== ==============
Vaccine recovery and
Q4 rotation +5.8 +12.6 +12.9
======== ======================= ========== ============== ==============
2020 FY +13.5 -9.8 +14.4
--------------------------------- ---------- -------------- --------------
Source: Ruffer LLP, Factset
To illustrate this another way the portfolio appreciated by 4.2%
in March 2020 when equities fell 15.1% and also appreciated by 5.2%
in November 2020 which was the best month for equities since
1987.
Portfolio attribution
Attribution for the year 2020 tells only part of the story. What
was important was not just what you owned, but when you owned
it.
In order to hold onto the major positive contributions from
gold, illiquid strategies, US Treasury Inflation Protected
Securities (TIPS) and option protection, we needed to add
opportunistically and lock in gains at various points during the
year. Similarly, while we lost money in equities over the year as a
whole (too much cyclical exposure in Q1), timely additions in the
middle of the year and a further rotation into cyclical stocks
meant that this part of the portfolio performed strongly in the
bounce in markets and vaccine announcement in November 2020.
Within the equity book the standout stock has continued to be
Ocado, rising 79% in 2020, 13% since 30 June and 774% since
purchase. Three other notable successes were Fujitsu (+45% in 2020,
+82% since purchase), Sony (+39% in 2020 and +271% since purchase)
and Weiss Korea (+59% in 2020 and +138% since purchase).
Having been a drag in the first half of 2020 our positions in
cyclical and value stocks were justified in the second half of the
year as they acted as an offset to long duration assets and
covid-19 winners (gold and long dated index-linked bonds for us,
technology and growth stock for many others). Stocks exposed to a
'v for vaccine' recovery have done well since purchase - notable
contributions came from Cemex (+98%), Uber (+44%), Barratt
Development (+42%) and Vinci (+42%). At the very end of the period
under review the announcement of a post-Brexit trade deal benefited
our position in domestic UK equities and the decision to add to
this part of the portfolio in October 2020. The reaction was more
muted than we expected, but as the covid-19 clouds start to clear
we expect the discount on UK equities to narrow.
Portfolio changes
There was some profit taking in gold and trading in US TIPS as
mentioned above and the equity weighting rose from c 30% to c 40%.
As we reported in July, a portfolio of index-linked bonds, gold and
cyclical/value stocks (which benefit from stimulated GDP growth)
and a significant sprinkling of protection against market calamity
looks to be the right mix for the current environment.
Although our cyclical/value stocks were strong immediately
following the vaccine news, we must remember both the portfolio
role they play and the longer-term context. These stocks are geared
to improving economic prospects and rising interest rates - this is
vital as the rest of the portfolio stands to benefit more from
continued financial repression and poorer market and economic
outcomes. Secondly, these types of stocks have underperformed
growth and quality factors for a decade. If there is an extended
rotation, which would rely upon improved economic growth, then the
recent outperformance has much further to run.
One notable addition to the portfolio during November 2020 was
bitcoin exposure. We gained our bitcoin exposure via the Ruffer
Illiquid Multi Strategies Fund and two proxy equities in
Microstrategy and Galaxy Digital Holdings. At the period end the
combined exposure of these was just over 3%. In the short period
since investing both stocks are up more than 100% and bitcoin is up
90%.
Our rationale has been well publicised but, briefly, we have a
history of using unconventional protections in our portfolio. This
is another example, a small allocation to an idiosyncratic asset
class which we think brings something significantly different to
the portfolio. Due to zero interest rates the investment world is
desperate for new safe-havens and uncorrelated assets. We think we
are relatively early to this, at the foothills of a long trend of
institutional adoption and financialisation of bitcoin. Think of
bitcoin's bad reputation as a risk premium - as we move through the
process of normalisation, regulation, and institutionalisation, the
compression of this premium can have a dramatic effect on the
price. If we are wrong, bitcoin will return to the shadows and we
will lose money - this explains why we have kept the position size
small but meaningful.
Investment outlook
As we enter 2021 there is near consensus in financial markets on
four things -
1 Covid-19 will be conquered by the vaccine
2 Central banks will keep printing money without limit
3 Governments will keep spending without limit
4 Valuations no longer matter because the winners and losers have been settled
But coming into 2020 there was near universal consensus that
global growth would accelerate. The one thing that mattered in
2020, coronavirus, was on few people's radar. Most did not see it
coming and markets were complacent to the risk. As Daniel Kahneman
put it: "the correct lesson to learn from surprises is that the
world is surprising."
Given the unique blow to the economy and the co-ordinated
shock-and-awe global response, it seems fair to conclude that the
distribution of possible outcomes from here is wider than it has
ever been. This makes a genuinely all-weather portfolio even more
important.
The economy
It now seems we are in a K-shaped recovery - that means winners
and losers. The unique shape of the covid-19 crisis and
accompanying recession has meant some industries have thrived
whilst others have suffered. What does the K mean? In caricature,
everyone now uses Zoom and Peloton and offices and gyms are forced
to close. Big beats small. The digital economy beats everything.
Covid-19 acted as the 'Great Accelerator' to a whole host of trends
which were already in motion.
This applies to individuals as much as it does to companies. The
rich have benefited from asset prices rising, access to cheap debt
and more independence. Those less fortunate have faced job losses
and managing precariously through a patchwork of government
support.
The K is not OK because it leads to a hollowing out of the
economy and, as we are observing, it will exacerbate inequality and
cost far too many jobs. Despite the government schemes, the job
losses dwarfed any historical comparison. Even after a significant
recovery, US levels of unemployment are only just back to those
levels seen at the trough of the global financial crisis.
It feels like we live in a world of two extremes - the real
economy which has been severely wounded and a rose-tinted, utopian,
liquidity-fuelled world in the financial economy.
Why does this matter? Because governments have a habit of
bending to popular will and there are a lot of disenfranchised
people as a result of covid-19 who are looking for
someone/something to blame. Capitalism, big business, the rich -
all seem to be probable targets who will have to 'pay their fair
share'. Furthermore, because politicians can read the mood of
voters too, this will ultimately lead to government intervention
and antitrust. The first signs are showing with talk of student
debt forgiveness, a $15 minimum wage in the US and a coming
reckoning for Big Tech in the US.
The optimistic take on the current economic situation is, as
governments have realised through necessity, that the frontiers of
tolerable levels of government borrowing and spending are further
out than previously thought. Those, including Ruffer, who have
worried about the unsustainable debt dynamics are looking more
wrong than ever. This is music to political and Keynesian ears and
it is an invitation they won't need to be offered twice to get more
active in 'investing in the economy'. Such a policy is entirely
unsustainable if bond yields rise, hence the obsession by the
authorities in keeping interest rates nailed to the floor.
We can layer on top of this unexpected debt headroom the
possibility of significant pent-up demand. After the Spanish flu in
1918 came the roaring 20s. The combination of the First World War
plus a pandemic meant that people had put their lives on pause. It
is entirely possible that for many something similar has happened
during covid-19 - delayed weddings, cancelled holidays, etc. Might
the animal spirits post-vaccine in mid-2021 catch us all by
surprise? If so it seems plausible that bond yields will indeed
rise and there will be upward pressure on prices.
A new investment regime
The question all investors need to be asking themselves today is
'why do I own conventional bonds?'
Bonds have been the cornerstone safe haven asset for investor
portfolios since the creation of modern portfolio theory in the
1950s. As an asset class they have done a fantastic job, delivering
strong returns and crucially acting as a wonderful portfolio
offset. This is because bonds have gone up at times of stress when
riskier assets in portfolios have fallen. They have been a hedge,
but one with significant positive carry - the holy grail! But from
here - with yields as low as they are - it is hard to see why
anyone would own them. What do they add to your portfolio?
Bond prices are not just at record highs. They now offer
guaranteed negative returns before considering inflation. As Jim
Grant famously observed: 'they have gone from risk free return, to
return free risk.' This has not escaped the notice of investors,
which is why they have taken on more credit risk in order to
achieve required yields and branched into assets outside
traditional fixed income markets. These bond proxies (think
infrastructure, renewable energy projects, property, private
credit, defensive equities) are now exposed to the same risks as
conventional bonds.
nvestors are prepared to hold around $18tn worth of bonds
knowing full well they will get back less than their original
investment if held to maturity. Only 15% of the entire world bond
market yields more than 2%.
At best, this is a bubble in pessimism. Are asset allocators so
devoid of good ideas they will guarantee a small loss at the risk
of anything worse happening? At worst, this is the tyranny of
benchmarking writ large as 'investors' paint by numbers into assets
guaranteeing losses.
But bonds are a mathematically bounded asset class - from here
the 'bond math' is challenging. In the US the ten year bond yield
would have to fall to -0.7% to offset a 10% fall in the S&P 500
in a typical 60/40 portfolio. This is possible, but not likely, and
anything worse than a 10% fall in the equity market would require
even more sharply negative yields.
It is worth drawing on a recent example - had you held 10 year
German bunds from 2019 through the covid-19 crash you would have
lost money. That is to say that through the sharpest, deepest
recession in recorded history you lost money in one of the ultimate
safe-haven conventional government bonds.
For these reasons we do not hold conventional government bonds
in the Company. Inflation-linked bonds offer a different
opportunity as explained below.
The big question - how do we pay for all this?
Regardless of how the economy recovers from the pandemic, we can
say for sure that western societies will come out of this carrying
significantly more debt than before. The need to address this issue
has become a necessity. Step 1 is to ensure that borrowing costs
are kept as low as possible. Step 2 is to look at ways to start
deleveraging. We all know that austerity is politically toxic and
ineffective. Growing our way out of this bind is vanishingly
unlikely given that it hasn't worked for at least the last half a
century. While default will always be the nuclear option to be
avoided at all costs, history does show us that a default via the
back door of inflation is both the most effective 'solution' and
the most politically palatable. In the current situation this
option also has the added political benefit of appeasing the social
pressure to address wealth inequality. Financial repression
(interest rates below the rate of inflation) rewards the have-nots
of society at the expense of the haves. Debt is inflated away and
asset values typically fall.
Conventional bonds offer no protection in this scenario and
equities tend to perform poorly when inflation starts to pick up
materially. Our belief is that a combination of index-linked bonds,
gold and some digital currency will offer protection.
Summary
We are moving into a new investment regime in the post-covid-19
world. As ever in a regime change, there will be individual winners
and losers, but perhaps more importantly the investment template
from the previous regime is unlikely to work (aka driving with the
rear view mirror). Our key takeaways are as follows-
1 Covid-19 as the Great Accelerator - many existing trends have
been amplified. Of these the greatest threat to investors is the
necessity of financial repression to pay for past debts.
2 The negative bond/equity correlation trade may be over -
conventional portfolios are riskier than they appear through
back-testing scenarios.
3 Expect the unexpected - a genuinely all-weather portfolio is going to be essential.
4 Beware the duration trade - many different assets have
benefited from falling bond yields. A mix of cyclical equities and
interest rate options gives you a genuine diversifier.
Faced with these challenges our job is to construct a portfolio
for the Company which will protect and grow our investors' capital
in a wide variety of market scenarios. Constructing a genuinely
diversified portfolio has never been more challenging, but the
results from this year, where we have experienced the full spectrum
of market scenarios, is encouraging. On the protective side we have
exposure to anti-assets like credit default swaps, index-linked
bonds, gold, bitcoin or expressions of volatility. These are assets
which, in isolation, may make traditional investors uncomfortable,
but through the prism of the whole portfolio can be true
diversifiers. On the growth side, if policy makers and vaccine
producers are successful in facilitating a re-opening and nominal
GDP growth then cyclical equities, those geared into the economic
recovery, will be the place to be. We saw the first hint of this
trend in November.
Ruffer AIFM Limited
26 February 2021
Top ten holdings
Holding at % of total
Investments Currency 31 Dec 20 Fair value GBP net assets
===================================================== =========== ============ ================ ============
Ruffer Illiquid Multi Strategies Fund 2015 GBP 52,961,000 37,071,905 7.85
US Treasury inflation indexed bond 1.75% 15/01/2028 USD 22,000,000 24,534,858 5.19
UK index-linked gilt 0.125% 22/03/2068 GBP 6,800,000 23,526,064 4.98
LF Ruffer Gold Fund* GBP 6,714,906 21,722,721 4.60
UK index-linked gilt 0.375% 22/03/2062 GBP 6,050,000 20,117,300 4.26
Ruffer UK Mid & Smaller Companies GBP 71,400 18,198,455 3.85
UK index-linked gilt 1.875% 22/11/2022 GBP 9,000,000 14,100,384 2.98
US Treasury inflation indexed bond 0.875% 15/01/2029 USD 15,000,000 13,296,606 2.81
US Treasury inflation indexed bond 0.25% 15/02/2050 USD 14,862,400 13,113,808 2.78
Lloyds Banking Group GBP 31,776,800 11,579,466 2.45
===================================================== =========== ============ ================ ============
* LF Ruffer Gold Fund is classed as a related party because its
investment manager, Ruffer LLP, is the parent company of the
Company's Investment Manager.
Ruffer Illiquid Multi Strategies Fund 2015 Ltd is classed as a
related party as it shares the same Investment Manager as the
Company.
Statement of principal risks and uncertainties
The Board is responsible for the Company's system of internal
controls and for reviewing its effectiveness. The Board, through
its Audit and Risk Committee, has carried out a robust assessment
of the principal risks and uncertainties facing the Company by
using a comprehensive risk matrix as the basis for analysing the
Company's system of internal controls while monitoring the
investment limits and restrictions set out in the Company's
investment objective and policy.
The principal risks assessed by the Board relating to the
Company were disclosed in the Annual Financial Report for the year
ended 30 June 2020. The principal risks disclosed include
investment risk, operational risk, accounting, legal and regulatory
risk and financial risks. A detailed explanation of these can be
found within the Annual Financial Report. The Board and Investment
Manager do not consider these risks to have materially changed
during the six months ended 31 December 2020, and are not expected
to change in the remaining six months of the financial year.
Going concern
The Directors believe that, having considered the Company's
investment objective (see Business Model and Strategy within the
Annual Financial Report), financial risk management and associated
risks (see note 19 to the Financial Statements within the Annual
Financial Report) and in view of the liquidity of investments
(assuming, as the Board does, that market liquidity continues), the
income deriving from those investments and its holdings in cash and
cash equivalents, the Company has adequate financial resources and
suitable management arrangements in place to continue as a going
concern for at least 12 months from the date of approval of these
Interim Financial Statements. The Directors also note that overall,
due to the nature of the Company's portfolio, which comprises both
equities and other more defensive assets, it has not been
materially adversely affected in terms of value or cashflows by the
effects of the covid-19 pandemic.
Responsibility statement
Responsibility statement of the Directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge
- the half-yearly financial report and Unaudited Condensed
Interim Financial Statements have been prepared in accordance with
International Accounting Standards (IAS) 34, Interim Financial
Reporting as adopted by the European Union and
- the half-yearly financial report and Unaudited Condensed
Interim Financial Statements (including the Chairman's Statement
and the Investment Manager's Report) meet the requirements of an
interim management report and include a fair review of the
information required by
a DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of Financial Statements and a description of principal risks
and uncertainties for the remaining six months of the year and
b DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period and any changes in the related party transactions
described in the last Annual Financial Report that could do so.
On behalf of the Board
David Staples, Director
26 February 2021
Independent review report to the shareholders of Ruffer
Investment Company Limited
We have been engaged by Ruffer Investment Company Limited ('the
Company') to review the condensed set of financial statements in
the half-yearly financial report for the six months ended 31
December 2020 which comprises the condensed statement of
comprehensive income, condensed statement of financial position,
the condensed statement of changes in equity and the condensed
statement of cash flows and related notes 1 to 13. We have read the
other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 'Interim
Financial Reporting' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
December 2020 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity' issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
St Peter Port
Guernsey
26 February 2021
Condensed statement of financial position (unaudited)
as at 31 December 2020
31 Dec 2020 GBP 30 Jun 2020 GBP
======================================================================= =============== ===============
Notes (unaudited) (audited)
================================================================ ===== =============== ===============
Assets
Non-current assets
Investments at fair value through profit or loss 10,11 432,272,347 400,997,042
Current assets
Cash and cash equivalents 36,981,180 42,667,336
Trade and other receivables 471,968 8,877,207
Derivative financial assets 11 4,036,172 -
Total current assets 41,489,320 51,544,543
================================================================ =====
Total assets 473,761,667 452,541,585
================================================================ ===== =============== ===============
Liabilities
Current liabilities
Trade and other payables 493,710 4,887,485
Derivative financial liabilities 11 821,613 3,541,719
================================================================ ===== =============== ===============
Total liabilities 1,315,323 8,429,204
================================================================ ===== =============== ===============
Net assets 472,446,344 444,112,381
================================================================ ===== =============== ===============
Equity
Capital and reserves attributable to the Company's shareholders
Share capital 4 186,459,986 186,459,986
Capital reserve 187,219,226 158,853,795
Retained revenue reserve 3,717,573 3,749,041
Other reserves 95,049,559 95,049,559
================================================================ ===== =============== ===============
Total equity 472,446,344 444,112,381
================================================================ ===== =============== ===============
Net assets attributable to holders of redeemable
participating preference shares (per share) 12 261.33p 245.65p
================================================================ ===== =============== ===============
The Unaudited Condensed Interim Financial Statements were
approved on 26 February 2021 and signed on behalf of the Board of
Directors by
David Staples, Director
The notes form an integral part of these Unaudited Condensed
Interim Financial Statements
Condensed statement of comprehensive income (unaudited)
for the period ended 31 December 2020
1 Jul 20 to 1 Jul 19 to
31 Dec 20 31 Dec 19
Notes Revenue GBP Capital GBP total GBP total GBP
======================================================= ======= ============= =========== =========== ===========
Fixed interest income 548,004 - 548,004 681,489
Dividend income 1,592,879 - 1,592,879 2,093,889
Net changes in fair value of financial assets at fair
value through profit or loss 5,10 - 18,983,644 18,983,644 9,065,572
Other gains 6 - 11,543,891 11,543,891 4,236,668
======================================================= ======= ============= =========== =========== ===========
Total income 2,140,883 30,257,535 32,668,418 16,077,618
======================================================= ======= ============= =========== =========== ===========
Management fees 8 - (2,162,104) (2,162,104) (1,917,784)
Expenses 7 (310,557) - (310,557) (328,847)
======================================================= ======= ============= =========== =========== ===========
Total expenses (310,557) (2,162,104) (2,472,661) (2,246,631)
======================================================= ======= ============= =========== =========== ===========
Profit for the period before tax 1,830,326 28,365,431 30,195,757 13,830,987
Withholding tax (144,304) - (144,304) (250,171)
======================================================= ======= ============= =========== =========== ===========
Profit for the period after tax 1,686,022 28,365,431 30,051,453 13,580,816
======================================================= ======= ============= =========== =========== ===========
Total comprehensive income
for the period 1,686,022 28,365,431 30,051,453 13,580,816
======================================================= ======= ============= =========== =========== ===========
Basic and diluted earnings per share* 0.93p 15.69p 16.62p 7.51p
======================================================= ======= ============= =========== =========== ===========
The revenue and capital return columns are prepared under
guidance published by the Association of Investment Companies. All
revenue and capital items in the above statement derive from
continuing operations.
* Basic and diluted earnings per share are calculated by
dividing the profit after taxation by the weighted average number
of redeemable participating preference shares in issue during the
period. The weighted average number of shares for the period was
180,788,416 (31 Dec 2019: 180,788,416). As there are no items which
would cause a dilution to occur, the basic and diluted earnings per
share are the same.
The notes form an integral part of these Unaudited Condensed
Interim Financial Statements.
Condensed statement of changes in equity (unaudited)
for the period ended 31 December 2020
Capital *Retained revenue *Other reserves Total 1 Jul 20 to
Notes Share capital GBP reserve GBP reserve GBP GBP 31 Dec 20 GBP
=================== ===== ================= ============ ================= ================== ==================
Balance at 30 June
2020 186,459,986 158,853,795 3,749,041 95,049,559 444,112,381
Total comprehensive
income for the
period - 28,365,431 1,686,022 - 30,051,453
Transactions with
Shareholders
Distribution for
the period 3 - - (1,717,490) - (1,717,490)
=================== ===== ================= ============ ================= ================== ==================
Balance at 31
December 2020 186,459,986 187,219,226 3,717,573 95,049,559 472,446,344
=================== ===== ================= ============ ================= ================== ==================
Capital Retained revenue Other reserves* Total 1 Jul 19 to
Notes Share capital GBP reserve GBP reserve* GBP GBP 31 Dec 19 GBP
=================== ===== ================= ============ ================= ================== ==================
Balance at 30 June
2019 186,459,986 121,407,708 3,357,744 95,049,559 406,274,997
Total comprehensive
loss for the
period - 13,580,816 - 13,580,816
Transactions with
Shareholders
Distribution for
the period 3 - - (1,627,096) - (1,627,096)
=================== ===== ================= ============ ================= ================== ==================
Balance at 31
December 2019 186,459,986 134,988,524 1,730,648 95,049,559 418,228,717
=================== ===== ================= ============ ================= ================== ==================
*Under the Companies (Guernsey) Law, 2008, the Company can
distribute dividends from share capital and reserves, subject to
satisfying a solvency test. However, the Company's dividend policy
is that dividends will only be paid from accumulated revenue
reserve. In order to provide clearer information relating to this
reserve, the Company has separately identified it in these
financial statements as a 'Retained revenue reserve' in the
Statement of Financial Position and the Statement of Changes in
Equity. 'Other reserves' represents amounts converted from share
premium in 2004 and 2008.
The notes form an integral part of these Unaudited Condensed
Interim Financial Statements.
Condensed statement of cash flows (unaudited)
for the period ended 31 December 2020
1 Jul 20 to 1 Jul 19 to
Notes 31 Dec 20 GBP 31 Dec 19 GBP
=================================================================== ======= ============== ==============
Cash flows from operating activities
Profit for the period after tax 30,051,453 13,580,816
Adjustments for
Net realised gains on investments 5,10 (16,343,029) (20,351,226)
Movement in unrealised (gains)/losses on investments 5,10 (2,640,615) 11,285,654
Realised gains on forward foreign exchange contracts 6 (4,767,122) (3,282,313)
Movement in unrealised gains on forward foreign exchange contracts 6 (6,756,278) (1,077,612)
Foreign exchange (gains)/losses on cash and cash equivalents (20,491) 123,257
Decrease/(increase) in trade and other receivables 331,842 (92,790)
Increase/(decrease) in trade and other payables 6,225 (332,040)
------------------------------------------------------------------- ------- ============== ==============
(138,015) (146,254)
Net cash received on closure of forward foreign exchange contracts 4,767,122 3,282,313
Purchases of investments (160,332,564) (130,482,705)
Sales of investments 151,714,300 149,674,298
=================================================================== ======= ============== ==============
Net cash (used in)/generated from operating activities (3,989,157) 22,327,652
=================================================================== ======= ============== ==============
Cash flows from financing activities
Dividend paid 3 (1,717,490) (1,627,096)
Net cash used in financing activities (1,717,490) (1,627,096)
=================================================================== ======= ============== ==============
Net (decrease)/increase in cash and cash equivalents (5,706,647) 20,700,556
Cash and cash equivalents at beginning of the period 42,667,336 19,375,840
Exchange gains/(losses) on cash and cash equivalents 20,491 (123,257)
=================================================================== ======= ============== ==============
Cash and cash equivalents at end of the period 36,981,180 39,953,139
=================================================================== ======= ============== ==============
The notes form an integral part of these Unaudited Condensed
Interim Financial Statements.
Notes to the unaudited condensed interim financial
statements
for the period ended 31 December 2020
1 The Company
The Company was incorporated with limited liability in Guernsey
on 1 June 2004 as a company limited by shares and as an authorised
closed-ended investment company. As an existing closed-ended fund
the Company is deemed to be granted an authorised declaration in
accordance with section 8 of the Protection of Investors (Bailiwick
of Guernsey) Law, 1987, as amended and rule 6.02 of the Authorised
Closed-ended Investment Schemes Rules 2008. The Company is listed
on the Main Market of the London Stock Exchange (LSE) and was
admitted to the premium segment of the Official List of the UK
Listing Authority on 20 December 2005.
2 Significant accounting policies
The following accounting policies have been applied consistently
in dealing with items which are considered to be material in
relation to the Company's Unaudited Condensed Interim Financial
Statements.
Basis of preparation
The Unaudited Condensed Interim Financial Statements for the
period ended 31 December 2020 have been prepared using accounting
policies consistent with IFRSs as adopted by the European Union and
in accordance with IAS 34 as adopted by the European Union, and the
Disclosure and Transparency Rules of the UK Financial Conduct
Authority.
They have been prepared on a going concern basis and under the
historical cost convention, as modified by the revaluation of
financial assets and financial liabilities held at fair value
through profit or loss.
This half-yearly financial report, covering the period from 1
July 2020 to 31 December 2020, is not audited.
The Unaudited Condensed Interim Financial Statements do not
include all the information and disclosures required in the Annual
Financial Report and should be read in conjunction with the Annual
Financial Report for the year ended 30 June 2020, which was
prepared in accordance with IFRSs as adopted by the European Union.
The Audit Report on those accounts was not qualified.
Significant judgements and estimates
In the financial period under review, there were no changes to
the significant accounting judgements, estimates and assumptions
from those applied in the Annual Financial Report for the year
ended 30 June 2020.
Standards, amendments and interpretations effective during the
period
The accounting policies adopted are consistent with those used
in the Annual Financial Report for the year ended 30 June 2020.
There were no new standards, interpretations or amendments to
standards issued and effective for the period that materially
impacted the Company.
3 Dividends to shareholders
Dividends, if any, are declared semi-annually, usually in
September and March each year. The Company declared and paid the
following dividends during the period.
1 Jul 20 to 1 Jul 19 to
31 Dec 20 GBP 31 Dec 19 GBP
======================================== ============== ==============
Interim dividend of 0.95p (2019: 0.90p) 1,717,490 1,627,096
---------------------------------------- -------------- --------------
A second interim dividend of 0.95p per share in respect of the
half year ended 31 December 2020 was declared on 26 February 2021.
The dividend is payable on 27 March 2021 to shareholders on record
at 13 March 2021.
4 Share capital
Authorised share capital 31 Dec 20 GBP 30 Jun 20 GBP
---------------------------------- ------------- -------------
Unclassified shares of 0.01p each Unlimited Unlimited
75,000,000 C shares of 0.10p each 75,000 75,000
================================== ============= =============
75,000 75,000
================================== ============= =============
Number of shares Share capital
------------------------ ==============================
1 Jul 20 to 1 Jul 19 to 1 Jul 20 to 1 Jul 19 to
Issued share capital 31 Dec 20 30 Jun 20 31 Dec 20 GBP 30 Jun 20 GBP
========================================================= =========== =========== ============== ==============
Redeemable Participating Preference Shares of 0.01p each
Balance at start of period/year 180,788,416 180,788,416 186,459,986 186,459,986
Balance as at end of period/year 180,788,416 180,788,416 186,459,986 186,459,986
========================================================= =========== =========== ============== ==============
Unclassified shares
Unclassified shares can be issued as nominal shares or
redeemable participating preference shares. Nominal shares can only
be issued at par to the Administrator. The Administrator is obliged
to subscribe for nominal shares for cash at par when redeemable
participating preference shares are redeemed to ensure that funds
are available to redeem the nominal amount paid up on redeemable
participating preference shares. The holder or holders of nominal
shares shall have the right to receive notice of and to attend
general meetings of the Company but shall not be entitled to vote
thereat. Nominal shares shall carry no right to dividends. In a
winding-up, holders of nominal shares shall be entitled to be
repaid an amount equal to their nominal value out of the assets of
the Company.
The holders of fully paid redeemable participating preference
shares are entitled to one vote at all meetings of the relevant
class of shareholders.
C shares
There were no C shares in issue at period end (30 June 2020:
Nil).
Block listing and additional shares issued
At the start of the period, the Company had the ability to issue
6,321,341 redeemable participating shares under a block listing
facility. No new redeemable participating preference shares were
allotted and issued under the block listing facility during the
period (30 June 2020: no new shares). New redeemable participating
preference shares rank pari passu with the existing shares in
issue.
As at 31 December 2020, the Company had the ability to issue a
further 6,321,341 (30 June 2020: 6,321,341) redeemable
participating preference shares under the block listing
facility.
On 4 February 2021, the Company announced a tap issue of 500,000
redeemable participating preference shares in the Company under its
block listing facility at an issue price of 270.0p per share.
On 10 February 2021, the Company announced a further tap issue
of 1,000,000 redeemable participating preference shares in the
Company under its block listing facility at an issue price of
275.5p per share.
On 11 February 2021, the Company announced a further tap issue
of 1,000,000 redeemable participating preference shares in the
Company under its block listing facility at an issue price of
275.5p per share.
On 18 February 2021, the Company announced a further tap issue
of 500,000 redeemable participating preference shares in the
Company under its block listing facility at an issue price of
276.5p per share.
On 24 February 2021, the Company announced a further tap issue
of 750,000 redeemable participating preference shares in the
Company under its block listing facility at an issue price of
276.25p per share.
On 25 February 2021, the Company announced a further tap issue
of 1,000,000 redeemable participating preference shares in the
Company under its block listing facility at an issue price of
276.25p per share.
Redeemable participating preference shares in issue
As at 31 December 2020, the Company had 180,788,416 (30 June
2020: 180,788,416) redeemable participating preference shares of
0.01 pence each in issue. Therefore, the total voting rights in the
Company at 31 December 2020 were 180,788,416 (30 June 2020:
180,788,416).
Purchase of own shares by the Company
A special resolution was passed on 4 December 2020 which
authorised the Company in accordance with the Companies (Guernsey)
Law, 2008 to make purchases of its own shares as defined in that
Ordinance of its Participating Shares of 0.01 pence each, provided
that -
i the maximum number of shares the Company can purchase is no
more than 14.99% of the Company's issued share capital
ii the minimum price (exclusive of expenses) which may be paid
for a share is 0.01 pence, being the nominal value per share
iii the maximum price (exclusive of expenses) which may be paid
for the share is an amount equal to the higher of (i) 105% of the
average of the middle market quotations for a share taken from the
LSE Daily Official List for the 5 business days immediately
preceding the day on which the Share is purchased and (ii) the
price stipulated in Article 5(i) of the Buy-back and Stabilisation
Regulation (No 2237 of 2003)
iv purchases may only be made pursuant to this authority if the
shares are (at the date of the proposed purchase) trading on the
LSE at a discount to the lower of the undiluted or diluted NAV
v the authority conferred shall expire at the conclusion of the
Annual General Meeting of the Company in 2021 or, if earlier, on
the expiry of 15 months from the passing of this resolution, unless
such authority is renewed prior to such time and
vi the Company may make a contract to purchase shares under the
authority hereby conferred prior to the expiry of such authority
which will or may be executed wholly or partly after the expiration
of such authority and may make an acquisition of shares pursuant to
any such contract.
5 Net changes in financial assets at fair value through profit or loss
1 Jul 20 to 1 Jul 19 to
31 Dec 20 GBP 31 Dec 19 GBP
Net changes in financial assets at fair value through profit or loss
during the period comprise
Gains realised on investments sold during the period 19,603,238 22,393,284
Losses realised on investments sold during the period (3,260,209) (2,042,058)
-------------- --------------
Net realised gains on investments sold during the period 16,343,029 20,351,226
Movement in unrealised gains/(losses) arising from changes in fair value 2,640,615 (11,285,654)
=================================================================================== ============== ==============
Net changes in fair value on financial assets at fair value through profit or loss 18,983,644 9,065,572
=================================================================================== ============== ==============
6 Other gains/(losses)
1 Jul 20 to 1 Jul 19 to
31 Dec 20 GBP 31 Dec 19 GBP
================================================================== ============== ==============
Movement in unrealised gain on forward foreign currency contracts 6,756,278 1,077,612
Realised gains on forward foreign currency contracts 4,767,122 3,282,313
Foreign exchange gains/(losses) on cash and cash equivalents 20,491 (123,257)
================================================================== ============== ==============
11,543,891 4,236,668
================================================================== ============== ==============
7 Expenses
1 Jul 20 to 1 Jul 19 to
31 Dec 20 GBP 31 Dec 19 GBP
========================================== ============== ==============
Administration fee* 82,149 82,017
Directors' fees (note 8) 89,977 80,919
Custodian and Depositary fees* 42,903 40,066
Broker's fees 18,132 17,604
Audit fee 11,550 13,475
Auditor's remuneration for interim review 8,500 8,400
Other expenses 57,346 86,366
========================================== ============== ==============
310,557 328,847
========================================== ============== ==============
* The basis for calculating the Administration fee as well as
the Custodian and Depositary fees are set out in the General
Information section.
Ongoing charges ratio
The ongoing charges ratio (OCR) of an investment company is the
annual percentage reduction in shareholder returns as a result of
recurring operational expenditure. Ongoing charges are classified
as those expenses which are likely to recur in the foreseeable
future, and which relate to the operation of the company, excluding
investment transaction costs, financing charges, gains or losses on
investments and any other expenses of a non-recurring nature. The
OCR for the current period has been calculated as the total ongoing
charges for the period divided by the average net asset value over
that period, in accordance with the methodology recommended by the
Association of Investment Companies.
1 Jul 20 to 1 Jul 19 to
31 Dec 20 GBP 31 Dec 19 GBP
Management fee (see note 8) 2,162,104 1,917,784
Other expenses (see above) 310,557 328,847
================================== -------------- --------------
2,472,661 2,246,631
Excluded expenses* - (27,000)
================================== -------------- --------------
Total ongoing expenses 2,472,661 2,219,631
================================== -------------- --------------
Average NAV 452,235,618 414,408,659
Annualised ongoing charges ratio 1.09% 1.07%
================================== -------------- --------------
* Excluded expenses in the prior period included consultancy
costs relating to Board recruitment and certain non-recurring
project costs.
8 Related party transactions and material contracts
The Directors are responsible for the determination of the
investment policy of the Company and have overall responsibility
for the Company's activities, and are therefore regarded as related
parties.
Investment Management Agreement
The Company is managed by Ruffer AIFM Ltd, a subsidiary of
Ruffer LLP, a privately owned business registered in England and
Wales as a limited liability partnership. The Company and the
Investment Manager have entered into an Investment Management
Agreement under which the Investment Manager has been given
responsibility for the day-to-day discretionary management of the
Company's assets (including uninvested cash) in accordance with the
Company's investment objective and policy, subject to the overall
supervision of the Directors and in accordance with the investment
restrictions in the Investment Management Agreement and the
Company's Articles of Incorporation.
The market value of holdings in the LF Ruffer Funds where an
investment management fee is already charged from within that fund
are deducted from the NAV of the Company before the calculation of
management fees on a monthly basis. For additional information,
refer to the Portfolio Statement.
Total management fees charged to the capital reserves of the
Company, including the outstanding management fees at the end of
the period, are detailed below.
1 Jul 20 to 1 Jul 19 to
31 Dec 20 GBP 31 Dec 19 GBP
=============================== =============== ================
Management fees for the period 2,162,104 1,917,784
------------------------------- --------------- ----------------
31 Dec 2020 GBP 30 June 2020 GBP
=============================== =============== ================
Payable at end of the period 377,614 375,692
=============================== =============== ================
Shares held in Ruffer Management Limited ('RML'), the Managing
Member of Ruffer LLP
During the period ended 31 December 2020, an immediate family
member of the Ashe Windham, Chairman of the Company until his
resignation on 4 December 2020, owned 100 (30 June 200: 100) Shares
in RML, the Managing Member of Ruffer LLP, which is the parent
entity of the Investment Manager of the Company. This amounts to
less than 1% (30 June 2020: less than 1%) of RML's issued share
capital.
Directors
As at 31 December 2020, the Company had five non-executive
Directors, all of whom were independent from the Investment Manager
and its parent entity, Ruffer LLP. During the period, Nick Pink was
appointed as a Director on 1 September 2020 and Ashe Windham
retired as a Director on 4 December 2020. On 4 December 2020, Jill
May was appointed as Senior Independent Director and Christopher
Russell was appointed as Chairman. There were no other changes to
directorships during the period ended 31 December 2020.
The Directors of the Company are remunerated for their services
at such a rate as the Directors determine provided that the
aggregate amount of such fees does not exceed GBP200,000 (30 June
2020: GBP200,000) per annum.
During the period, each Director was paid a fee of GBP29,500 (30
June 2020: GBP29,500) per annum, except for the Chairman, who was
paid GBP41,700 (30 June 2020: GBP41,700) per annum and the Chairman
of the Audit Committee, who was paid GBP33,950 (30 June 2020:
GBP33,950) per annum.
1 Jul 20 to 1 Jul 19 to
31 Dec 20 GBP 31 Dec 19 GBP
=============================== =============== ================
Directors' fees for the period 89,977 80,919
=============================== =============== ================
31 Dec 2020 GBP 30 June 2020 GBP
=============================== =============== ================
Payable at end of the period - -
=============================== =============== ================
Shares held by related parties
As at 31 December 2020, Directors of the Company held the
following numbers of shares beneficially.
Directors 31 Dec 20 shares 30 Jun 20 shares
==================== ================ ================
Ashe Windham* na 180,000
Christopher Russell 100,000 75,000
David Staples 80,000 80,000
Jill May 11,000 11,000
Shelagh Mason - -
Nick Pink 36,023 na
==================== ================ ================
227,023 346,000
==================== ================ ================
* Ashe Windham held 135,000 shares whilst his wife held 45,000
shares
Subsequent to the period end, Shelagh Mason acquired a holding
of 11,325 shares in the Company.
As at 31 December 2020, Hamish Baillie, Investment Director of
the Investment Manager owned 205,000 (30 June 2020: 205,000) shares
in the Company.
As at 31 December 2020, Duncan MacInnes, Investment Director of
the Investment Manager owned 43,100 (30 June 2020: 43,100) shares
in the Company.
As at 31 December 2020, Jonathan Ruffer, chairman of Ruffer LLP,
owned 1,039,335 (30 June 2020: 1,039,335) shares in the
Company.
As at 31 December 2020, Ruffer LLP (the parent entity of the
Company's Investment Manager) and other entities within the Ruffer
Group held 7,140,778 (30 June 2020: 6,896,028) shares in the
Company on behalf of its discretionary clients.
Investments in related funds
As at 31 December 2020, the Company held investments in four (30
June 2020: four) related investment funds valued at GBP85,695,486
(30 June 2020: GBP91,153,877). Refer to the Portfolio Statement for
details.
9 Operating segment reporting
The Board of Directors makes the strategic decisions on behalf
of the Company. The Company has determined the operating segments
based on the reports reviewed by the Board, which are used to make
strategic decisions.
The Board is responsible for monitoring the Investment Manager's
positioning of the Company's portfolio and considers the business
to have a single operating segment.
There were no changes in the reportable segments during the
period.
Revenue earned is reported separately in the Statement of
Comprehensive Income as dividend income received from equities, and
interest income received from fixed interest securities and bank
deposits.
The Statement of Cash Flows separately reports cash flows from
operating and financing activities.
10 Investments at fair value through profit or loss
1 Jul 20 to 1 Jul 19 to
31 Dec 20 GBP 30 Jun 20 GBP
--------------
Cost of investments at the start of the period/year 350,041,991 351,139,573
Acquisitions at cost during the period/year 155,932,564 353,038,268
Disposals during the period/year (143,640,903) (391,462,001)
Gains on disposals during the period/year 16,343,029 37,326,151
============================================================= -------------- --------------
Cost of investments held at the end of the period/year 378,676,681 350,041,991
Fair value above cost 53,595,666 50,955,051
============================================================= -------------- --------------
Fair value of investments held at the end of the period/year 432,272,347 400,997,042
============================================================= -------------- --------------
11 Fair Value Measurement
IFRS 13 establishes a fair value hierarchy that prioritises the
inputs to valuation techniques used to measure fair value, and
requires the Company to classify its financial instruments into the
level of the fair value hierarchy that best reflects the
significance of the inputs used in making fair value measurements.
The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level
1 measurements) and the lowest priority to unobservable inputs
(Level 3 measurements). The three levels of the fair value
hierarchy are as follows -
Level 1: Quoted prices, based on bid prices, (unadjusted) in
active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices included within Level 1
that are observable for the asset or liability either directly
(that is, as prices) or indirectly (that is, derived from prices)
and
Level 3: Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. For this purpose, the
significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses
observable inputs that require significant adjustment based on
unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgment, considering factors
specific to the asset or liability.
The determination of what constitutes 'observable' requires
judgment by the Company. The Company considers observable data to
be that market data that is readily available, regularly
distributed or updated, reliable and verifiable, not proprietary,
and provided by independent sources that are actively involved in
the relevant market.
The following table presents the Company's financial assets and
liabilities by level within the valuation hierarchy at 31 December
2020.
31 Dec 20
Level 1 GBP Level 2 GBP Level 3 GBP total GBP
===========================================================
Financial assets at fair value through profit or loss
Non-UK index-linked bonds 103,327,610 - - 103,327,610
Long-dated index-linked gilts 43,643,364 - - 43,643,364
Other index-linked gilts 14,100,384 - - 14,100,384
Illiquid strategies and options - 46,044,310 - 46,044,310
Equities 173,924,238 18,198,455 - 192,122,693
Gold and gold equities 11,311,265 21,722,721 - 33,033,986
Derivative financial assets - 4,036,172 - 4,036,172
=========================================================== =========== =========== =========== ===========
Total assets 346,306,861 90,001,658 - 436,308,519
=========================================================== =========== =========== =========== ===========
Financial liabilities at fair value through profit or loss
Derivative financial liabilities - 821,613 - 821,613
=========================================================== =========== =========== =========== ===========
Total liabilities - 821,613 - 821,613
=========================================================== =========== =========== =========== ===========
The following table presents the Company's financial assets and
liabilities by level within the valuation hierarchy at 30 June
2020.
30 Jun 20
Level 1 GBP Level 2 GBP Level 3 GBP total GBP
Financial assets at fair value through profit or loss
Non-UK index-linked bonds 95,722,858 - - 95,722,858
Long-dated index-linked gilts 44,790,755 - - 44,790,755
Short-dated gilts 16,016,640 - - 16,016,640
Other index-linked gilts 2,367,022 - - 2,367,022
Illiquid strategies and options - 57,608,234 - 57,608,234
Equities 115,865,893 15,477,398 1,593,750 132,937,041
Gold and gold equities 33,486,247 18,068,245 - 51,554,492
Total assets 308,249,415 91,153,877 1,593,750 400,997,042
=========================================================== ----------- ----------- ----------- -----------
Financial liabilities at fair value through profit or loss
Derivative financial liabilities - 3,541,719 - 3,541,719
=========================================================== ----------- ----------- ----------- -----------
Total liabilities - 3,541,719 - 3,541,719
=========================================================== ----------- ----------- ----------- -----------
The Company recognises transfers between levels of fair value
hierarchy as of the end of the reporting period during which the
transfer has occurred. During the period ended 31 December 2020, no
transfers were made. In the prior year ended 30 June 2020, no
transfers were made.
Movements in Level 3 investments
1 Jul 20 to 1 Jul 19 to
31 Dec 20 GBP 30 Jun 20 GBP
================================== ============== ==============
Opening valuation 1,593,750 1,593,750
Liquidation distribution received (1,809,375) -
Realised gain 215,625 -
Closing valuation - 1,593,750
================================== ============== ==============
During the period, the liquidators of Renn Universal Growth
Investment Trust, the Company's sole Level 3 investment, made a
third liquidation distribution to shareholders of GBP1.93 per
share. There is a chance of a further small residual payment, but
of an unknown amount at an unknown date in the future, as a result
of which no value has been ascribed to this investment at 31
December 2020.
Assets classified in Level 1 consist of listed or quoted
equities or bonds which are issued by corporate issuers,
supra-nationals or government organisations.
Assets classified in Level 2 are investments in funds
fair-valued using the official NAV of each fund as reported by each
fund's independent administrator at the reporting date. Where these
funds are invested in equity type products, they are classified as
equity in the table above. Options and foreign exchange forwards
are fair valued using publicly available data. The foreign exchange
forwards are shown as derivative financial assets and liabilities
in the fair value hierarchy table.
Assets classified in Level 3 consist of investments for which no
market exists for trading, for example investments in liquidating
or illiquid funds, and are reported using the latest available
official NAV less dividends declared to date of each fund as
reported by each fund's independent administrator at the last
reporting date. Where a market exists for trading in illiquid
funds, these are classified in Level 2.
12 NAV reconciliation
The Company announces its NAV, based on bid value, to the LSE
after each weekly and month end valuation point. At the time of
releasing the NAV to the LSE for 31 December 2020, not all the
latest prices for the investments were available. Adjustments are
made to the NAV in the Financial Statements once these prices
became available. The following is a reconciliation of the NAV per
share attributable to redeemable participating preference
shareholders as presented in these Financial Statements, using
IFRS, to the NAV per share reported to the LSE.
31 Dec 20 30 June 20
==================== =====================
NAV per NAV per
share share
NAV GBP GBP NAV GBP GBP
======================================== =========== ======= =========== ========
NAV per share published on the LSE
as at the period/year end 471,058,880 2.6056 444,397,682 2.4581
Adjustments to valuations 1,387,464 0.0077 (285,301) (0.0016)
======================================== =========== ======= =========== ========
Net assets attributable to holders
of redeemable participating preference
shares 472,446,344 2.6133 444,112,381 2.4565
======================================== =========== ======= =========== ========
13 Subsequent events
These Financial Statements were approved for issuance by the
Board on 26 February 2021. Subsequent events have been evaluated up
until this date.
On 4 February 2021, the Company announced a tap issue of 500,000
redeemable participating preference shares in the Company under its
block listing facility at an issue price of 270.0p per share.
On 10 February 2021, the Company announced a further tap issue
of 1,000,000 redeemable participating preference shares in the
Company under its block listing facility at an issue price of
275.5p per share.
On 11 February 2021, the Company announced a further tap issue
of 1,000,000 redeemable participating preference shares in the
Company under its block listing facility at an issue price of
275.5p per share.
On 18 February 2021, the Company announced a further tap issue
of 500,000 redeemable participating preference shares in the
Company under its block listing facility at an issue price of
276.5p per share.
On 24 February 2021, the Company announced a further tap issue
of 750,000 redeemable participating preference shares in the
Company under its block listing facility at an issue price of
276.25p per share.
On 25 February 2021, the Company announced a further tap issue
of 1,000,000 redeemable participating preference shares in the
Company under its block listing facility at an issue price of
276.25p per share.
A second interim dividend of 0.95p per share in respect of the
half year ended 31 December 2020 was declared on 26 February 2021.
The dividend is payable on 27 March 2021 to shareholders on record
at 13 March 2021.
Portfolio statement
as at 31 December 2020 (unaudited)
Holding at Fair % of total
Currency 31 Dec 20 value GBP net assets
===================================================== ========= =========== =========== ===========
Government bonds 34.09%
(30 Jun 20: 35.78%)
Non-UK index-linked bonds
Japanese index linked bond 10/03/2026 JPY 350,000,000 2,520,155 0.53
Japanese index linked bond 10/03/2027 JPY 350,000,000 2,530,496 0.54
Japanese index linked bond 10/03/2028 JPY 350,000,000 2,503,594 0.53
US Treasury inflation indexed bond 0.125% 15/04/2021 USD 10,000,000 8,065,124 1.71
US Treasury inflation indexed bond 0.125% 15/04/2022 USD 11,986,100 9,585,206 2.03
US Treasury inflation indexed bond 0.625% 15/04/2023 USD 12,049,300 9,728,679 2.06
US Treasury inflation indexed bond 1.75% 15/01/2028 USD 22,000,000 24,534,858 5.19
US Treasury inflation indexed bond 0.875% 15/01/2029 USD 15,000,000 13,296,606 2.81
US Treasury inflation indexed bond 0.625% 15/02/2043 USD 4,900,000 5,058,935 1.07
US Treasury inflation indexed bond 0.75% 15/02/2045 USD 9,836,000 10,259,177 2.17
US Treasury inflation indexed bond 1.0% 15/02/2049 USD 2,000,000 2,130,972 0.45
US Treasury inflation indexed bond 0.25% 15/02/2050 USD 14,862,400 13,113,808 2.78
===================================================== ========= =========== ----------- -----------
Total non-UK index-linked bonds 103,327,610 21.87
UK index-linked gilts
Long-dated index-linked gilts
UK index-linked gilt 0.375% 22/03/2062 GBP 6,050,000 20,117,300 4.26
UK index-linked gilt 0.125% 22/03/2068 GBP 6,800,000 23,526,064 4.98
===================================================== ========= =========== =========== ===========
Total long-dated index-linked gilts 43,643,364 9.24
Other index-linked gilts
UK index-linked gilt 1.875% 22/11/2022 GBP 9,000,000 14,100,384 2.98
----------------------------------------------------- ========= =========== =========== ===========
Total UK index-linked gilts 57,743,748 12.22
---------------------------------------------------------------- =========== =========== ===========
Total government bonds 161,071,358 34.09
---------------------------------------------------------------- =========== =========== ===========
Equities 40.67%
(30 Jun 20: 29.93%)
Europe
Aena EUR 20,000 2,540,903 0.54
Arcelormittal EUR 200,000 3,375,950 0.71
Carrefour EUR 180,000 2,257,845 0.48
Vinci EUR 60,000 4,364,417 0.92
Volkswagen EUR 34,000 4,620,474 0.98
Yara NOK 105,000 3,190,781 0.68
Total Europe equities 20,350,370 4.31
Holding at Fair % of total
Currency 31 Dec 20 value GBP net assets
============================================== ========= ========== ========== ===========
United Kingdom
Aberforth Smaller Companies GBP 45,400 562,960 0.12
Artemis Alpha Trust GBP 160,000 630,400 0.13
Barclays GBP 3,400,000 4,987,120 1.06
Barratt Developments GBP 300,000 2,009,400 0.43
Belvoir Lettings GBP 695,000 1,042,500 0.22
BP GBP 2,200,000 5,605,600 1.19
Breedon GBP 1,700,000 1,485,800 0.31
Countryside Properties GBP 1,050,206 4,908,663 1.04
Grit Real Estate GBP 1,626,850 780,888 0.17
Hipgnosis Songs Fund GBP 1,400,000 1,729,000 0.37
Independent Investment Trust GBP 100,000 512,000 0.11
Land Securities GBP 340,000 2,288,200 0.48
Lloyds Banking Group GBP 31,776,800 11,579,466 2.45
Montanaro UK Smaller Companies GBP 300,000 432,000 0.09
Natwest Group GBP 3,736,790 6,259,123 1.32
North Atlantic Smaller Companies GBP 15,500 573,501 0.12
Ocado Group GBP 115,000 2,613,950 0.55
PRS Real Estate Investment Trust GBP 2,500,000 1,900,000 0.40
Renn Universal Growth Trust GBP 937,500 - -
Royal Dutch Shell B GBP 440,000 5,541,360 1.17
Ruffer SICAV UK Mid & Smaller Companies Fund* GBP 71,400 18,198,455 3.85
Secure Trust Bank GBP 58,345 491,265 0.10
Tesco GBP 3,000,000 6,942,000 1.47
Tufton Oceanic Assets USD 2,348,347 1,563,274 0.33
Total UK equities 82,636,925 17.48
Holding at Fair % of total
Currency 31 Dec 20 value GBP net assets
============================= ========= ========== ========== ===========
North America
Aflac USD 84,000 2,731,997 0.58
Ambev USD 1,688,700 3,767,765 0.80
American Express USD 55,000 4,863,899 1.02
Berkshire Hathaway USD 13,000 2,204,770 0.47
Bristol Myers Squibb CVR USD 77,000 38,866 0.01
Cemex USD 370,000 1,396,635 0.30
Centene USD 75,000 3,291,331 0.70
Charles Schwab USD 90,000 3,474,250 0.74
Cigna USD 30,000 4,568,691 0.97
Ehealth USD 40,300 2,081,921 0.44
Galaxy Digital Holdings CAD 350,000 2,169,671 0.46
General Motors USD 136,000 4,141,683 0.88
Microstrategy USD 4,009 1,139,500 0.24
Uber USD 25,000 932,699 0.20
Walt Disney USD 56,000 7,418,873 1.57
============================= ========= ========== ========== ===========
Total North America equities 44,222,551 9.38
Japan
Central Glass JPY 13,000 206,760 0.04
Dena JPY 28,600 372,002 0.08
Fuji Electric JPY 105,000 2,763,471 0.58
Fuji Media JPY 34,600 269,635 0.06
Fujitec JPY 18,900 298,187 0.06
Fujitsu JPY 32,000 3,377,871 0.71
Japan Petroleum Exploration JPY 10,800 143,537 0.03
Kato Sangyo JPY 17,900 441,305 0.09
Koito Manufacturing JPY 6,500 322,803 0.07
Mitsubishi Electric JPY 280,000 3,087,550 0.65
Mitsubishi Heavy Industries JPY 120,000 2,656,673 0.56
NEC JPY 78,000 3,055,811 0.65
Nippo JPY 13,500 270,088 0.06
Nippon Seiki JPY 35,500 293,499 0.06
Nippon Television JPY 22,300 177,415 0.04
Holding at Fair % of total
Currency 31 Dec 20 value GBP net assets
================================ ========= ========== =========== ===========
Nissan Shatai JPY 55,000 336,807 0.07
Nomura Real Estate JPY 270,000 4,365,019 0.92
Orix JPY 370,000 4,152,061 0.88
Sekisui Jushi JPY 8,800 135,659 0.03
Shin-Etsu Polymer JPY 33,100 221,129 0.05
Sony JPY 46,000 3,351,729 0.71
Sumitomo Mitsui Financial Group JPY 170,000 3,839,494 0.81
Tachi-S JPY 43,200 359,607 0.08
Teikoku Sen-I JPY 26,900 455,277 0.10
Toagosei JPY 31,600 271,105 0.06
Toei Animation JPY 11,500 657,473 0.14
Toei JPY 2,000 238,038 0.05
Token JPY 4,400 254,049 0.05
Tokio Marine JPY 62,000 2,331,029 0.49
Tokyo Broadcasting System JPY 17,400 223,241 0.05
Toppan Forms JPY 26,800 200,496 0.04
Torii Pharmaceutical JPY 9,700 221,276 0.05
Toyota JPY 5,100 295,550 0.06
TS Tech JPY 10,000 225,640 0.05
TV Asahi JPY 15,900 190,479 0.04
================================ ========= ========== =========== ===========
Total Japan equities 40,061,765 8.47
Asia (ex-Japan)
Swire Pacific HKD 730,000 2,963,082 0.63
Weiss Korea Opportunity Fund GBP 800,000 1,888,000 0.40
-------------------------------- --------- ---------- ----------- -----------
Total Asia (ex-Japan) equities 4,851,082 1.03
------------------------------------------- ---------- ----------- -----------
Total equities 192,122,693 40.67
------------------------------------------- ---------- ----------- -----------
Gold and gold equities 6.99%
(30 Jun 20: 11.61%)
AngloGold Ashanti USD 90,000 1,488,588 0.31
IAmGold USD 1,100,000 2,953,182 0.63
Ishares Physical Gold USD 120,000 3,245,135 0.69
Kinross Gold USD 675,000 3,624,360 0.76
LF Ruffer Gold Fund* GBP 6,714,906 21,722,721 4.60
Total gold and gold equities 33,033,986 6.99
=========================================== ========== =========== ===========
Holding at Fair % of total
Currency 31 Dec 20 value GBP net assets
============================================ ========= ========== =========== ===========
Illiquid strategies and options 9.75%
(30 Jun 20: 12.97%)
Ruffer Illiquid Multi Strategies Fund 2015* GBP 52,961,000 37,071,905 7.85
Ruffer Protection Strategies International* GBP 3,769,126 8,972,405 1.90
============================================ ========= ========== =========== ===========
Total illiquid strategies and options 46,044,310 9.75
======================================================= ========== =========== ===========
Total investments 432,272,347 91.50
------------------------------------------------------- ---------- ----------- -----------
Cash and other net current assets 40,173,997 8.50
------------------------------------------------------- ---------- ----------- -----------
472,446,344 100.00
------------------------------------------------------ ---------- ----------- -----------
* Ruffer Protection Strategies International and Ruffer Illiquid
Multi Strategies Fund 2015 Ltd are classed as related parties as
they share the same Investment Manager (Ruffer AIFM Limited) as the
Company. LF Ruffer Gold Fund and Ruffer SICAV UK Mid & Smaller
Companies Fund are also classed as related parties as their
investment manager (Ruffer LLP) is the parent of the Company's
Investment Manager.
No management fee is charged by Ruffer AIFM Limited on this
investment.
General information
Ruffer Investment Company Limited was incorporated in Guernsey
as a company limited by shares and as an authorised closed-ended
investment company on 1 June 2004. The Company launched on the
London Stock Exchange on 8 July 2004, with a launch price of 100p
per share and an initial net asset value of 98p per share. The
principal objective of the Company is to achieve a positive total
annual return, after all expenses, of at least twice the Bank of
England base rate. The Company invests predominantly in
internationally listed or quoted equities or equity related
securities (including convertibles) and/or bonds which are issued
by corporate issuers, supra-nationals or government
organisations.
The Company's redeemable participating preference shares are
listed on the London Stock Exchange.
The Company reports its audited annual results each year for the
year ended 30 June, and its unaudited interim results for the six
months ended 31 December. These Unaudited Condensed Interim
Financial Statements were authorised for issue on 26 February 2021
by the Directors.
The Investment Manager is authorised and regulated by the United
Kingdom Financial Conduct Authority as a full-scope Alternative
Investment Fund Manager (AIFM). The Investment Manager is entitled
to an investment management fee payable to the AIFM monthly in
arrears at a rate of 1% of the Net Asset Value per annum.
The Investment Manager and the Board intend to conduct the
affairs of the Company so as to ensure that it will not become
resident in the United Kingdom. Accordingly, and provided that the
Company does not carry on a trade in the United Kingdom through a
branch or agency situated therein, the Company will not be subject
to United Kingdom Corporation Tax or Income Tax.
The Company intends to be operated in such a manner that its
shares are not categorised as non- mainstream pooled investments.
This means that the Company might pay dividends in respect of any
income that it receives or is deemed to receive by reference to UK
tax rules so that it would qualify as an investment trust if it
were UK tax-resident.
Praxis Fund Services Limited (the 'Administrator') is entitled
to receive an annual fee equal to 0.08%. per annum on the first
GBP100 million; 0.04%. per annum between GBP100 million and GBP200
million; 0.02%. per annum between GBP200 million and GBP300
million; and 0.015%. per annum thereafter; based on the NAV of the
Company on a mid-market basis, subject to a minimum fee of
GBP100,000 per annum.
Northern Trust (Guernsey) Limited (the 'Custodian') is entitled
to receive from the Company a fee of GBP2,000 per annum. The
Custodian is also entitled to charge for certain expenses incurred
by it in connection with its duties.
Northern Trust (Guernsey) Limited (the 'Depositary') is entitled
to an annual Depositary fee payable monthly in arrears at a rate of
0.01% of the Net Asset Value of the Company up to GBP100 million,
0.008% on the next GBP100 million and 0.006% thereafter as at the
last business day of the month subject to a minimum fee of
GBP20,000 per annum.
Management and administration
Directors
Christopher Russell
Jill May
David Staples
Shelagh Mason
Nicholas Pink
Registered office
Sarnia House
Le Truchot
St Peter Port
Guernsey GY1 1GR
Auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
Guernsey GY1 3HW
Investment Manager and Alternative Investment Fund Manager
Ruffer AIFM Limited
80 Victoria Street
London SW1E 5JL
Sponsor and broker
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Solicitors to the Company as to UK law
Gowling WLG
4 More London Riverside
London SE1 2AU
Company Secretary and Administrator
Praxis Fund Services Limited
Sarnia House
Le Truchot
St Peter Port
Guernsey GY1 1GR
CREST agent
Computershare Investor Services (Jersey) Limited Queensway
House
Hilgrove Street
St Helier
Jersey JE1 1ES
Advocates to the Company as to Guernsey law
Mourant Ozanne
Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey GY1 4HP
Custodian
Northern Trust (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3DA
Depositary
Northern Trust (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3DA
Appendix (unaudited)
Performance data
To 31 Dec 96 97 98 99 00 01 02 03 04 05 06 07 08
=============== ==== ==== ==== ==== ==== ===== ===== ==== ==== ==== ==== ==== =====
Ruffer 10.6 19.8 22.7 -0.2 16.8 5.5 3.0 16.8 11.3 - - - -
RIC NAV TR - - - - - - - - - 14.0 0.1 6.0 23.8
FTSE All-Share 16.7 23.6 13.8 24.2 -5.9 -13.3 -22.7 20.9 12.8 22.0 16.8 5.3 -29.9
Twice Bank
Rate 12.7 13.8 15.6 11.3 12.5 11.0 8.3 7.7 9.0 9.7 9.6 11.5 10.3
=============== ==== ==== ==== ==== ==== ===== ===== ==== ==== ==== ==== ==== =====
09 10 11 12 13 14 15 16 17 18 19 20
==== ==== ==== ==== ==== === ==== ==== ==== ==== ==== ====
- - - - - - - - - - - -
15.1 16.5 0.7 3.4 9.5 1.8 -1.0 12.4 1.6 -6.0 8.4 13.5
30.1 14.5 -3.5 12.3 20.8 1.2 1.0 16.8 13.1 -9.5 19.2 -9.8
1.5 1.0 1.0 1.0 1.0 1.0 1.0 0.8 0.5 1.2 1.5 0.5
==== ==== ==== ==== ==== === ==== ==== ==== ==== ==== ====
Source: Thomson Datastream, Ruffer, FTSE International (FTSE) .
Ruffer performance comprises the performance from June 1995 to July
2004 for Ruffer's representative portfolio, an unconstrained
segregated portfolio following Ruffer's investment approach
(derived from internal management information produced by Ruffer
LLP), and from July 2004 to December 2020 for the Ruffer Investment
Company Limited NAV (total return). Performance is shown after
deduction of all fees and management charges, and on the basis of
income being reinvested. Please note that past performance is not a
reliable indicator of future performance. The value of the shares
and the income from them can go down as well as up and you may not
get back the full amount originally invested. The value of overseas
investments will be influenced by the rate of exchange. Calendar
quarter data has been used up to the latest quarter end and monthly
data thereafter. FTSE International Limited (FTSE) (c) FTSE 2021.
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liability for any errors or omissions in the FTSE indices and/or
FTSE ratings or underlying data and no party may rely on any FTSE
indices, ratings and/or data underlying data contained in this
communication. No further distribution of FTSE Data is permitted
without FTSE's express written consent. FTSE does not promote,
sponsor or endorse the content of this communication.
[1] Assumes reinvestment of dividends
[2] Dividends declared during the period
[3] Annual dividend yield is calculated using share price at the
period end and dividends declared during the period
[4] See note 7
[5] This is the NAV per share as per the Financial Statements.
Refer to note 12 for a reconciliation between this figure and the
NAV per share as reported to the LSE
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END
IR BCGDDSGDDGBL
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