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Ruffer Investment Co Ltd on Wednesday reported its October net asset value underperformed against its FTSE All-Share TR benchmark as it noted a calmer gilt market since the UK's third prime minister of 2022 took office.
Ruffer is an investor aiming for a positive total annual return of at least twice the Bank of England base rate.
The company's NAV fell by 1.0% in October, while its benchmark rose by 3.1%.
Meanwhile, its NAV per share fell 1.4% to 301.53 pence on October 31 from 305.83p each on September 30. The company announced several tap issues of redeemable participating preference shares in October and last week.
Ruffer noted that the fund's equity positions were a positive contributor of 0.8% to returns, while the main detractor were unconventional protections, with a negative effect of 0.8% to returns.
"There was growing hope central banks would begin to slow their path of interest rate rises, and potentially even begin to hint at pivoting towards future cuts. At the same time, a relatively warmer autumn helped European gas prices fall, removing some shorter-term inflationary pressures. In the UK, the end of Liz Truss's brief term as prime minister, and the junking of her economic plans saw calm return to the gilt markets, which had been the epicentre of market volatility. All these things helped to boost market sentiment," Ruffer said.
Looking ahead, the company highlighted high and volatile inflation: "Our structural view remains that we have moved into a new regime, characterised by higher and more volatile inflation. Structurally higher inflation means we remain in a bear market for both bonds and equities. Inflation will also be more volatile and there will be periods when it might decline meaningfully. During these phases of falling inflation, we will need to participate in potentially powerful bond rallies. This is unequivocally not a reversion to the regime of the last four decades, but an acknowledgment that the path to the new regime is unlikely to be linear. Active management, including the use of cash, will continue to be key to driving returns," it said.
Ruffer shares were unchanged at 309.50 pence each in London on Wednesday afternoon.
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