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Statement on the UK Stewardship Code

Ruffer is an active investment manager dedicated to absolute return investing, managing assets on behalf of both professional and retail clients. Fundamental securities research across global markets is crucial to Ruffer’s investment approach, as are regular meetings with company representatives, conducted by its experienced inhouse research team. Continuous assessment of companies’ strategy, performance and management is core to Ruffer’s stock selection and, together with procedures for global proxy voting, lies at the centre of its stewardship responsibility and activity.

The UK Stewardship Code

In July 2010 the Financial Reporting Council (‘FRC’) issued a statement of seven principles which set out good practice for institutional investors’ engagement with investee companies. The stewardship principles state that institutional investors or their agents should

1. Publicly disclose their policy on how they will discharge their stewardship responsibilities
2. Have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed
3. Monitor their investee companies
4. Establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value
5. Be willing to act collectively with other investors where appropriate
6. Have a clear policy on voting and disclosure of voting activity
7. Report periodically on their stewardship and voting activities.

Ruffer’s response to the principles of the code

Ruffer broadly supports the principles of the UK Stewardship Code as a guide for good practice engagement with investee companies. It is in large part compatible with Ruffer’s existing corporate governance and voting policy. In particular, Ruffer complies with the principles of monitoring and escalation, which are key to the protection of the rights and economic interests of Ruffer’s clients, as beneficial owners of companies. Ruffer also has a strong record of acting collectively with other stakeholders in the interests of clients. Ruffer supports principles of disclosure insofar as they do not breach the confidential relationship that exists between Ruffer and each of its clients.

Ruffer’s position in relation to each of the principles is set out below.

1. Policy. Ruffer has a corporate governance and voting policy which aims to provide a pragmatic framework through which it can 
   – monitor companies in which Ruffer invests for its clients 
   – intervene with those companies, when necessary, on issues that are likely to  
      impact the economic interest Ruffer’s clients hold through their investments 
   
   The policy is intended to be sufficiently wide-ranging to reflect Ruffer’s global approach to investment and thereby operate consistently across all markets in which it invests for clients. Ruffer’s corporate governance and voting policy is made available to all clients.
    
2. Conflicts of interest. Where conflicts of interest on voting or engagement exist between Ruffer or a particular client and the wider client base, Ruffer will act in the best interests of the majority of its clients, in accordance with the regulatory responsibility to treat all customers fairly. Ruffer’s conflicts of interest policy is detailed in each client’s Investment Management Agreement.
    
3. Monitoring. All companies in which Ruffer invests for its clients are monitored by analysts on Ruffer’s research team. Monitoring includes study of company statements and third-party reports, and attendance at public meetings, but critically Ruffer is in the privileged position to engage the board and senior management of most investee companies directly, usually in ‘one-to-one’ meetings at Ruffer’s or the company’s offices. Monitoring is oriented towards identifying potential performance or governance problems at an early stage in order to minimise any loss of shareholder value by Ruffer’s clients.  The results and actions arising from monitoring activity conducted through company meetings are recorded on Ruffer’s systems.
    
4. Escalation. When an issue is identified, Ruffer may raise it directly with the board or senior management of the investee company. Performance issues might be raised at regular one-to-one meetings with senior management, or on an ad hoc basis, by Ruffer directly approaching the company or its advisers.  Governance issues might be more appropriately raised in separate meetings. These could be with executive or non-executive members of the board (eg Chairman, senior non-executive or independent directors). If appropriate, Ruffer would intervene with other shareholders (see below), or would submit resolutions to, or requisition, an EGM.  Ruffer would not rule out making public statements prior to an EGM, though this is unlikely due to considerations of confidentiality.
    
5. Acting collectively. Where it makes intervention more effective, Ruffer may engage with other shareholders in the investee company, either to decide or implement a course of intervention. In collaborating with other investors, Ruffer is mindful of legal and regulatory requirements, for example in relation to conflicts of interest, the use of inside information, or acting in concert with other parties.  Ruffer has a record of adding value to clients’ portfolios through acting collectively in its monitoring and escalation activities.
    
6. Voting. When necessary, Ruffer may attend and/or vote at company shareholder meetings. It is Ruffer’s policy to vote on AGM or EGM resolutions and corporate actions where
   – Ruffer’s clients have a material interest in the outcome of the resolution or
      action, for the protection or enhancement of their shareholder value and
      beneficial interest
   – Holdings of Ruffer’s clients are material to the outcome of the resolution
      or action
   
   When Ruffer does vote, it votes in what it considers to be the best interests of its clients.
    
7. Reporting. Ruffer treats information on clients’ voting activity as confidential. Clients may request details of their voting record.

Ruffer LLP
December 2010