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RUFFER TOTAL RETURN
INTERNATIONAL
Investment objective
MAY 2015
ISSUE 47 – O class
Share price as at 31 May 2015
O capitalisation shares
CHF
123.12
EUR
125.23
GBP
127.74
USD
126.19
The investment objective of Ruffer Total Return International (’the fund’) is to achieve positive returns
with low volatility from an actively managed portfolio. The fund may have exposure to the following
asset classes: cash, debt securities of any type (including government and corporate debt), equities and
equity related securities and commodities (including precious metals). Pervading this objective is a fundamental philosophy of capital preservation.
Performance since launch on 14 July 2011 – O class shares
150
140
130
120
110
Percentage growth (O cap) GBP
%
31 Mar 2014 – 31 Mar 2015
11.6
31 Mar 2013 – 31 Mar 2014
-0.7
31 Mar 2012 – 31 Mar 2013
10.6
31 Mar 2011 – 31 Mar 2012
31 Mar 2010 – 31 Mar 2011
na
na
Source: Ruffer LLP
Structure
Sub fund of Ruffer SICAV,
a Luxembourg domiciled
UCITS SICAV
Management company,
administrative agent,
registrar and transfer
agent, paying and
domiciliary agent
Investment manager
Custodian
FundPartner
Solutions
(Europe) S.A.
Ruffer LLP
Pictet & Cie
(Europe) S.A.
Auditors
Ernst & Young S.A.
O share classes
Capitalisation only
(equivalent to
accumulation)
Minimum
investment
Ongoing Charges
Figure (OCF)
£1,000
(or equivalent in
CHF, EUR or USD)
1.49%
Ruffer performance is shown after
deduction of all fees and management
charges, and on the basis of income being
reinvested. Past performance is not a guide
to 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.
100
90
80
Jul 11
Source: Ruffer LLP
Dec 11
May 12
Oct 12
Mar 13
Aug 13
Jan 14
Jun 14
Nov 14
Apr 15
Ruffer Total Return International O cap GBP
FTSE Govt All-Stocks TR
Ruffer Total Return International O cap EUR
FTSE All-Share TR
Monthly review
During May the O GBP capitalisation shares rose by
1.4%. This compared with a rise of 1.4% in the FTSE AllShare Index and a rise of 0.4% in the FTSE Government
All-Stocks Index (both figures total returns in sterling).
Currency exposure at the end of the month was 79%
sterling, 2% US dollar and 8% yen.
The old adage of selling in May and going away
would only have been partially successful thus far.
Whilst developed equity markets marched ever
higher, albeit with increasing volatility, fixed income
markets continued to suffer under their own weight
as the German ten-year bond yield rose (prices falling)
to the still eye-wateringly low level of 49 basis points.
The benchmark US bond followed suit with yields
rising back towards the 2015 highs. In currencies,
economic data in the US hinted that the economy
might be emerging from its early year doldrums,
ensuring that the US dollar started to regain some of
the momentum lost in April. This dynamic reasserted
pressure on both commodities and emerging
markets, and both also suffered from the continued
deterioration in Chinese economic data, highlighting
ongoing and potentially accelerating weakness in
areas of the economy. Despite the weakening data,
the Chinese equity market continued to march higher,
rising by a further 4%. However, the stand out
performer was Japan, with the Nikkei rising by over
5%. Against this bifurcated backdrop the portfolio
performed encouragingly, with most aspects providing a positive contribution.
May also saw the surprisingly clear outcome to the UK
general election, with the Conservatives winning their
first majority since 1992. Whilst this was initially a boon
to UK based assets, we cannot profess to have any
particular economic insights one way or the other as to
the market impact of the outcome. However, sterling is
likely to bathe in the post-election sunshine before
worries of Brexit or new referenda arrive, hence we
have reduced our yen exposure to 8% of the portfolio.
Whilst the yen does still maintain some protective
aspects for the portfolio, sterling could prove to be
independently strong with the positive economic
backdrop superimposed on a degree of political
certainty. Therefore we feel it is appropriate to bring
exposure in our base currency back to its highest level
since the launch of the fund.
Last month we highlighted the improving corporate
governance regime in Japan; this has started to receive
greater coverage across markets. There appears to be
a growing interest in the domestic self-help story as
the Nikkei enjoyed its longest winning streak since
1988. While heartened by the corporate governance
reforms, we see this as just an additional benefit on
top of the combined forces of monetary and fiscal
policy stimulus. We are also further encouraged that
many corporates are starting to realise some of their
cross shareholdings, which frees up capital within their
businesses, not only to return to shareholders but also
focus on more capital efficiency.
At the turn of the year many market commentators
expected that by now we would have already seen
the first rate rise in the US but the re-emergence of
disinflationary pressures has thus far delayed what
many see as the inevitable. The positive inflation print
in the last week of May has provided a reminder that
rates could well rise sooner rather than later. Whilst
this continues to eat up column inches it is worth
reminding that the sky high asset prices we are
currently witnessing are as a result of interest rates
being nailed to the floor. If and when rates do start to
rise it is likely that market volatility could well increase.
We are therefore attempting to ensure that the fund
is as robustly positioned as possible, by taking profits
where we see overvaluation and adding protection in
the form of options where appropriate.
Please note that Ruffer SICAV is a Luxembourg UCITS and subject to Luxembourg law. Ruffer SICAV is authorised by and subject to the supervisory
authority in Luxembourg, the CSSF, and is a scheme recognised by the UK’s Financial Conduct Authority (FCA). Ruffer Total Return International (RTRI) is
not registered for distribution in any country other than Belgium, Finland, France, Germany, Ireland, Luxembourg, the Netherlands, Spain, Sweden and the
UK. The fund’s prospectus is provided in English; key investor information documents are provided in Dutch, English, French, German, Spanish and Swedish
and are available on request or from www.ruffer.co.uk. Ruffer LLP is not able to market RTRI in other countries, except under certain exemptions.
Portfolio structure of Ruffer Total Return International as at 31 May 2015
Five largest equity holdings* as at 31 May 2015
Indexlinked gilts
11%
Stock
Japan
equities
18%
Non-UK
index-linked
15%
3.2
Mizuho Financial
2.9
Mitsubishi UFJ Financial
2.6
Sumitomo Mitsui Financial
2.3
1.5
* Excludes holdings in pooled funds
Asia
ex-Japan
equities
4%
North
America
equities
Europe 7%
Cash
14%
Dai-ichi Life Insurance
Boeing
UK
equities
9%
Long-dated
index-linked
gilts
10%
% of fund
equities
Illiquid
4%
Gold and
Options strategies
gold equities
1%
3%
4%
Source: Ruffer LLP
Stock
% of fund
Five largest bond holdings as at 31 May 2015
UK Treasury index-linked 0.125% 2068
6.8
UK Treasury index-linked 1.875% 2022
6.1
US TIPS 0.625% 2021
6.0
US TIPS 1.25% 2020
5.2
UK Treasury index-linked 0.125% 2019
5.0
Source: Ruffer LLP
Source: Ruffer LLP
Fund information
Asset allocation
100%
Fund size
£1,129.1m (31 May 2015)
90%
No. of holdings
80%
70%
63 equities, 8 bonds (31 May 2015)
Charges
Maximum subscription fee 5%
Maximum management fee
(per annum) O class 1.5%
Dealing
Weekly, every Thursday (if not a business day,
on the following business day)
Plus on the first business day of each month
Cut off
4pm Luxembourg time
on the day before valuation day
(so typically Tuesday and the business day
preceding the last business day of the month)
ISIN and
SEDOL
CHF
EUR
GBP
USD
60%
50%
40%
30%
20%
Equities
Bonds
JACQUES HIRSCH
Investment Director
Prior to joining Ruffer
in 2011, he spent
over ten years
working in fund
management and
macro research at
firms including Goldman Sachs, GLG
Partners and Fulcrum Asset
Management. He graduated from École
Centrale Paris in 1999, and holds an
MSc in Mathematics from Oxford
University. He is co-manager of Ruffer
Total Return International.
Cash
Q1 15
Q4 14
Q3 14
Q2 14
Q1 14
Q4 13
Q3 13
Q2 13
Q1 13
Q4 12
Q3 12
Q2 12
Q1 12
Q4 11
Q3 11
0%
Q2 11
10%
Options
ALEX LENNARD
Investment Director
Joined Ruffer in 2006
after graduating from
Exeter University with
an honours degree in
economics and finance;
he is a member of the
Chartered Institute for Securities &
Investment. He manages investment
portfolios, concentrating on family
offices and corporate pension schemes.
He is co-manager of Ruffer Total Return
International.
O cap
O cap
O cap
O cap
LU0638558808
LU0638558717
LU0638558634
LU0638558980
B4R1SD2
B42NV78
B41Y053
B449LX0
Enquiries
Ruffer LLP
80 Victoria Street
London SW1E 5JL
Tel +44 (0)20 7963 8254
Fax +44 (0)20 7963 8175
rif@ruffer.co.uk
www.ruffer.co.uk
Ruffer
The Ruffer Group manages investments on a discretionary
basis for private clients, trusts, charities and pension funds.
As at 31 May 2015, assets managed by the group exceeded
£18.8bn, of which over £9.0bn was managed in open-ended
Ruffer funds.
Issued by Ruffer LLP, 80 Victoria Street, London SW1E 5JL. Ruffer LLP is authorised and regulated by the Financial Conduct Authority. © Ruffer LLP 2015