PI Partnership – Ruffer LLP


vation of capital as markets move deeper into uncertain territory. DC schemes and their investors must learn the lessons from the gilt debacle. Because in a world which promises ever more risk and vola- tility, we must be prepared for the unlikely – not least, history repeating itself.


Tomorrow’s portfolio, different to today’s It may take time to play out – financial conditions are still incredibly loose – but we know trip wires lie ahead. And infla- tion is likely to fall sharply again when


financial and economic volatility coincide. Unfortunately, political authority is weak in the West, consensus on what the fair distribution of financial outcomes and welfare should be is frayed, and the ideo- logical divide between China and the US is growing. Policymakers could be forced back into monetary financing mode quickly if threatened by recession and asset market distress. These are fertile breeding grounds for inflation. Inflation volatility will eventually give way to inflation but investing now solely for the


inflationary endgame would be a mistake. Peter Drucker, the father of modern man- agement thinking, said: “The greatest dan- ger in times of turbulence is not the turbu- lence. It is to act with yesterday’s logic.” Turbulence lies ahead, that’s for sure. The message to DC pension scheme inves- tors: portfolios will need to be steered on this journey, requiring new skills, new ways of constructing portfolios and imag- inative thinking. The easy, passive – almost free – ride is coming to an end. It is time to flick the switch off autopilot.


Ruffer – Seeking to provide genuine diversification for DC schemes


1100 1000 900 800 700 600 500 400 300 200 100 0


Ruffer


To 31 Dec % Ruffer


FTSE All-Share Bank Rate


MSCI PIMFA Balanced 96


FTSE All-Share 97


98 99 00


FTSE/MSCI PIMFA Balanced 01


02 03 04 05 06


Bank Rate 07


08


09


10


11


12


13


14


15


16


17


18


19


20


21


22


10.6 19.8 22.7 -0.2 16.8 5.5 3.0 16.8 11.3 14.1 8.4 2.1 16.0 13.0 15.1 1.3 4.6 11.1 4.2 -0.1 10.9 0.5 -5.8 7.0 16.7 8.2 5.7 16.7 23.6 13.8 24.2 -5.9 -13.3 -22.7 20.9 12.8 22.0 16.8 5.3 -29.9 30.1 14.5 -3.5 12.3 20.8 1.2 1.0 16.8 13.1 -9.5 19.2 -9.8 18.3 0.3 6.1 6.6 7.4 5.5 6.0 5.3 4.1 3.8 4.4 4.7 4.7 5.6 5.0 0.8 0.5 0.5 0.5 0.5 0.5 0.5 0.4 0.3 0.6 0.8 0.3 0.1 1.3 11.9 20.7 16.6 18.7 -2.4 -9.6 -16.7 15.8 9.9 18.5 10.0 5.7 -17.4 16.8 12.5 0.2 9.1 14.1 7.2 2.7 17.1 9.9 -4.8 16.2 1.9 12.5 -8.1


Source: Ruffer, FTSE International, Bloomberg. 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 reliable indicator of 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. Calendar quarter data has been used up to the latest quarter end. Ruffer LLP is authorised and regulated by the Financial Conduct Authority. This document, and any statements accompanying it, are for information only and are not intended to be legally binding. Unless otherwise agreed in writing, our investment management agreement, in the form entered into, constitutes the entire agreement between Ruffer and its clients, and supersedes all previous assurances, warranties and representations, whether written or oral, relating to the services which Ruffer provides. All mentions of Ruffer performance refer to Ruffer’s representative portfolio, which shows the performance of an unconstrained, segregated portfolio of £1 million set up in 1995, and follows Ruffer’s investment approach. Performance prior to 1 July 2022 has been calculated using monthly data points, and thereafter using daily data points. More information: ruffer.co.uk/methodology FTSE International Limited (FTSE) © FTSE 2023. FTSE® is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data and no party may rely on any FTSE indices, ratings and/or data underlying data contained in this communication. No further distribution of FTSE Data is permitted without FTSE’s express written consent. FTSE does not promote, sponsor or endorse the content of this communication. MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an ‘as is’ basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the ‘MSCI parties’) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. msci.com


Issue 121 | March 2023 | portfolio institutional | 25


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