12th Sep 2018 13:46
LONDON (Alliance News) - Ruffer Investment Co Ltd on Wednesday reported a drop in net asset value largely due to costs of option protection and the illiquid strategy funds.
The company's net asset value per share was 228.97 pence as at June 30 , down from 229.04p a year ago.
The company's investment manager, Ruffer AIFM Ltd, described the company's option protection and illiquid asset vehicles - which protect against falling equity and bond markets - as "dragging anchors", but said that it did not "bemoan the cost".
Ruffer's annual target is to double the blended average Bank of England base rate in its financial year, and this target was achieved. Adding dividends paid during the year, Ruffer's net asset value total return was 0.8% while the blended Bank of England base rate for the period was 0.4%, meaning that the company met but did not exceed its target.
The company described the return as "pedestrian" when compared to its net asset value return of 8.85% the prior year and its annualised return since launch of 7.8%.
The FTSE All-Share Total Return index rose 9% in the year, which Ruffer provided "by way of context".
"It is worth pointing out that our objective is to preserve capital and not to try and shoot the lights out, especially when those lights are so elevated and burning brightly," said Ruffer Chairman Ashe Windham.
The company cut its interim dividend during the year to 0.9p from 1.7p during the year, resulting in an annual dividend reduction to 1.8p per share from 2.6p the year before. The company said this total is likely to be sustainable but may be reduced again in future, with the annual report having an overall message of caution.
"I am as confident as I can be in these deeply uncertain times that the company's strategy is sound. We should prepare for troubled times ahead whilst looking for undervalued equities to generate a return for shareholders should the denouement be further off than envisaged," said Windham.
"If our manager is right, and the next crisis is a generational event in terms of wealth distribution, then it will be a hard task to keep shareholders' capital safe. Yet that is the job we are charged with. We believe there will be sunny uplands on the other side for a buyer whose capital has not been eroded," he continued.
Shares in Ruffer Investment were down 0.2% at 227.48 pence on Wednesday.
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