Monthly Investment Report - July 2025
11 August 2025
RUFFER INVESTMENT COMPANY LIMITED
(a closed-ended investment company incorporated in Guernsey with registration number 41966)
(the "Company")
Attached is a link to the Monthly Investment Report for July 2025:
http://www.rns-pdf.londonstockexchange.com/rns/6727U_1-2025-8-8.pdf
Fund performance was positive in July, primarily driven by the equity holdings, with precious metals and US dollar exposures also contributing. In a strong month for global equity markets, key contributors included commodity equities such as BP, Asia-sensitive equities such as Prudential, and gold mining stocks such as Newmont.
Protective assets such as the credit position detracted from returns as credit spreads narrowed, and interest rate-sensitive assets such as the yen and the UK inflation-linked bonds also saw losses.
It's always important to us that the assets in the portfolio have good asymmetry: we aim to have holdings that go up (if right) by more than they go down (if wrong). As a result, we are often to be found trimming our winners and rotating the portfolio; in July, we exited the silver and platinum bullion positions as we deemed market sentiment and positioning excessively bullish. Together they contributed around one percentage point of year-to-date performance. We have retained, at a 6% weight, the position in gold mining stocks, where we still see record-high cashflow margins and great asymmetry.
During July, we made the portfolio more defensive overall by adding to the credit protection and trimming equities, and we are continuing this through August. Today's equity weight is just over 25%.
Zooming out, US exceptionalism over the last decade (but most especially since 2021) has had four pillars. The US has had the best-performing equity market, the strongest economy, the highest interest rates and the strongest currency. These dynamics have all been self-reinforcing, and today we see all four of them under threat. The US president would like interest rates to be lower; the Treasury secretary would like the currency to be weaker. They are slowly getting what they want.
A weakening dollar and falling US interest rates undermine US assets' attractiveness for foreign owners. If foreigners don't buy US equities to the extent they have been, continuing to fund the wide ($1.1 trillion) US current account deficit will force the dollar even lower. That would further harm US assets' appeal and so weaken the two remaining pillars of exceptionalism, strong asset markets and a strong economy (which are intrinsically linked).
Should AI remain market-leading and the Federal Reserve cut interest rates, we expect a weaker dollar and global reflation. The portfolio holds S&P call options, rest-of-world value stocks and commodities for such an eventuality. If the Fed fails (refuses?) to cut interest rates, or the expectations placed on AI turn out to be too lofty, markets and the real economy could fall surprisingly far, driving strong performance from the portfolio's protection strategies.
The fund has now delivered seven consecutive positive monthly returns, despite the wide variety of market environments so far this year. The bedrock of this performance has been dynamic asset allocation to reflect our changing macro views, good portfolio construction and balance to reflect our investment objectives, and a continuous focus on asymmetry in the securities we hold. We believe we are well suited to this world where fundamentals no longer seem to be the driving force behind asset price movements, and we hope active management and a focus on absolute return will prove its value.
Enquiries:
Apex Fund and Corporate Services (Guernsey) Limited
Company Secretary
Nicole Liebenberg
DDI: +44(0)20 3530 3653
Email: ruffercosec@apexgroup.com
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