Ruffer backs UK bond allocation despite performance drag
Ruffer defended the UK TIPS position, arguing the volatility in 2024's opening month was 'temporary' and did not alter its stance on the asset as a 'core element of our long-term inflation protections'.
In the trust's monthly investment report, the managers said the allocation to the asset class, which it called a «core holding» in the trust, was the «largest detractor to performance» in January.
Ruffer trust endures 'worst year in history' as 'protective toolkit' fails to deliver
According to data from FE fundinfo, the trust's total return fell 3.5% for the month, a bigger drop than the average IT Flexible trust's 0.1% loss.
The managers explained that it had increased its allocation to gilts at the end of 2023 after it felt «yields had fallen too far, too fast» given the trust's concerns over the «likely stickiness and volatility of inflation».
Ruffer defended the UK TIPS position, arguing the volatility in 2024's opening month was «temporary» and did not alter its stance on the asset as a «core element of our long-term inflation protections».
Ruffer cuts bond and equities exposure after 'complacent' market rally
The trust's managers said the backdrop in bond yields, especially in the UK, had created the drag after bonds stumbled at the end of 2023 as interest rate cuts and growth expectations were reduced.
«Global asset markets started the year almost unanimously priced for a perfect soft landing, following the strong rally in both equities and bonds into the year end,» Ruffer said.
«This left scope for disappointment in January if either assumption of early interest rate cuts or steady growth were dialled back.
»In the end it was bonds that gave way as doubts emerged over the speed of likely US rate cuts, whilst
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