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Seeking consistent positive returns.

Come rain or shine.

Ruffer provides investment management services for institutions, pension funds, charities, financial planners and individual investors.
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Ruffer LLP
80 Victoria Street
London SW1E 5JL
Directions | Map +44 (0)20 7963 8100
Paris
Ruffer S.A.
103 boulevard Haussmann
75008 Paris, France
Directions | Map +33 (0)1 88 45 02 54
New York
Ruffer LLC
300 Park Avenue
New York NY 10022
Directions | Map +1 917 947 3003
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Ruffer LLP
31 Charlotte Square
Edinburgh EH2 4ET
Directions | Map +44 (0)131 202 1602

Why traditional safe havens might not work

In the market sell-off this February, defensive assets failed to defend.
4 mins | Green Line
The Green Line
Duncan_Macinnes
Articles by Duncan
Duncan MacInnes
Fund Manager
12 April 2018

‘The only free lunch in investing’. That is how Harry Markowitz, Nobel Prize winner and creator of modern portfolio theory, described diversification back in 1952.

If diversification is to be effective, a portfolio will include assets that thrive in challenging times. The role of these ‘anti-fragile’ assets is to insulate the portfolio – they should rise in value in periods of market stress, when other assets are struggling.

The protective toolkit of assets traditionally includes US government bonds, the yen and gold.

This month’s Green Line shows how these safe-haven assets performed during previous periods of market stress.

Until this year, they have performed consistently well, acting as a shock absorber for portfolios. This has been true whether the market stresses were financial, political, global or local.

For example, in 2011, the crisis centred on the credit rating downgrade of the US government – yet US Treasuries still offered protection. In an ancillary blessing, these assets have also delivered strong returns to investors outside of crisis periods too.

Yet in February 2018, during a sharp market sell-off, each of these traditional protections misfired. As a result, conventional balanced portfolios had nothing to cushion their fall.

At Ruffer, we believe conventional balanced portfolios are now far riskier than they are generally perceived to be. This year, investors should think carefully about how their portfolio might perform should markets deteriorate.

We have been concerned about this risk for some time, and have put alternative safeguards in place to preserve our clients’ capital in the next market downturn. Investments with returns linked to a rise in market volatility, and to higher corporate borrowing costs, are giving us the protection we seek.

Duncan_Macinnes
Articles by Duncan
Duncan MacInnes
Fund Manager
Japan: a forgotten market?
March 2018: Japanese shares have risen strongly, but not nearly as much as company profits.
Read
Misplaced confidence?
February 2018: US consumer confidence is very high. Our analysis suggests this is not good news for investors in equity markets.
Read

Chart source: Bloomberg and Ruffer calculations, data applies to a two week period following each event.
Green Line
‘Washington, we have a problem’
July 2024: The cost of servicing US national debt is set to swallow an ever-greater share of the public purse over the coming years. To tackle the debt burden, governments are faced with an array of unpalatable choices – with higher inflation an increasingly likely side effect.
4 mins | Gemma Cairns-Smith
Read
Investment review
Investment Review
July 2024: Recent portfolio performance has, understandably, provoked questions from our clients and investors. These are broadly the same questions we have been asking ourselves, chief among which is: why are we comfortable owning a portfolio that feels so uncomfortable to hold? Jonathan Ruffer’s quarterly investment review seeks to answer that question, laying out the reasons for our conviction in a portfolio which can protect and grow capital as the market turns.
Audio icon
15 mins | Jonathan Ruffer
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Ruffer Review
Getting to the bottom of the dollar
Today, the dollar reigns supreme as the world’s principal reserve currency. But how did it reach this position? And how long can it stay there?
9 mins | Gemma Cairns-Smith
Read
London
Ruffer LLP
80 Victoria Street
London SW1E 5JL
Directions | Map +44 (0)20 7963 8100
Paris
Ruffer S.A.
103 boulevard Haussmann
75008 Paris, France
Directions | Map +33 (0)1 88 45 02 54
New York
Ruffer LLC
300 Park Avenue
New York NY 10022
Directions | Map +1 917 947 3003
Edinburgh
Ruffer LLP
31 Charlotte Square
Edinburgh EH2 4ET
Directions | Map +44 (0)131 202 1602