Ruffer makes first ever buyback in near 20-year history amid poor performance
Duncan MacInnes (pictured) runs the Ruffer Investment Company portfolio alongside Jasmine Yeo.
The company announced it had made the purchase, which represents approximately 0.04% of its current issued shares, yesterday (22 August).
The news comes as the trust has struggled in recent months amid heightened global volatility while doubling down on its defensive strategy. Over the past six months, Ruffer is down 15%, according to data from FE fundinfo.
Its protective assets, such as inflation-linked bonds, have hurt performance, while its growth assets in commodities and equities geared to the real economy were hit by the recent slowdown in China.
Ruffer Investment Company's defensive posture hurts performance as NAV slumps 1.7%
The trust had generally been trading on a premium of around 1-2% at the start of the year, but fell to a 2.5% discount in May and plummeted further to 7.5% at the end of June.
The buyback price represents a 6.3% discount to the NAV of £2.81 as at 15 August. As of 22 August, it is trading on a 5.07% discount, according to FE fundinfo.
In a research note, Ewan Lovett-Turner, investment companies analyst at Numis, said: «It will be interesting to see whether buybacks from Ruffer continue, and at what scale and frequency. Large portions of the portfolio are liquid and therefore it should have some firepower to undertake buybacks.»
Share buybacks are often used as a discount control mechanism to manage a trust's discount, but Lovett-Turner warned «they are never going to be a silver bullet».
Ruffer hails 'remarkable performance' but issues warning of further volatility
He added: «Instead, we believe they can be a very powerful signal from a board that it is focused on shareholder interests, as well
Read more on investmentweek.co.uk
