Ruffer Investment
Company Limited
Annual report
for the year ended
30 June 2023
Key performance indicators 3
Financial highlights 3
Chairman’s statement 5
Strategic report 11
Investment Manager’s report 19
Responsible investment report 36
Top ten holdings 42
Directors 43
Report of the Directors 45
Corporate governance statement 51
Directors’ remuneration report 65
Audit and Risk Committee report 68
Management Engagement Committee report 73
Report of the depositary 75
Independent Auditor’s report to the members of the Company 77
Statement of financial position 88
Statement of comprehensive income 89
Statement of changes in equity 90
Statement of cash flows 91
Notes to the Financial Statements 92
Portfolio statement 125
General information 129
Management and administration 131
Appendix (unaudited) 132
2
Contents
Key performance indicators
30 June 23 % 30 June 22 %
1
Share price total return over 12 months
2
(7.2) 5.6
NAV total return per share over 12 months
2
(1.7) 6.0
(Discount)/premium
3
of share price to IFRS NAV (3.1) 1.7
Dividends per share over 12 months
4
2.60p 3.05p
Annualised dividend yield
5
0.9 1.0
Annualised total return per share since launch
2
7.2 7.7
Ongoing charges ratio
6
1.07 1.07
Financial highlights
30 June 23 30 June 22
Share price 276.00p 300.00p
NAV at year end as calculated on an IFRS basis
7
£1,092,040,335 £952,784,773
NAV at year end as reported to the LSE £1,096,014,803 £947,554,437
Market capitalisation
3
£1,058,509,029 £969,008,292
Number of shares in issue 383,517,764 323,002,764
NAV per share
3
at year end as calculated on an IFRS basis
7
284.74p 294.98p
NAV per share
3
at year end as reported to the LSE 285.78p 293.36p
3
Ruffer Investment Company Limited
1 The financial effects of the Company’s formal equity fundraising in November 2021 were not accurately reflected in performance calculations, leading to past
performance figures being understated by a non-material amount in the Company’s interim, annual and monthly reports published between December 2021
and April 2023. The performance methodology has been updated to amend this error
2 Assumes reinvestment of dividends. See appendix for Alternative Performance Measures (APMs)
3 See Appendix for Alternative Performance Measures (APMs)
4 Dividends declared during the year
5 Annual dividend yield is calculated using share price at the year end and dividends declared during the year
6 See note 9
7 This is the NAV/NAV per share as per the Financial Statements. Refer to note 14 on page 106 for a reconciliation between this figure and the NAV/NAV per
share as reported to the LSE. See appendix for Alternative Performance Measures (APMs)
80
120
160
200
240
280
320
360
400
2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Total Return NAV
FTSE All-Share TR
Twice Bank Rate
Source: RAIFM Ltd, FTSE International, data to 30 June 2023. All figures include reinvested income. Ruffer performance is shown after deduction of all fees and management charges.
Performance data is included in the appendix.
PERFORMANCE TO 30 JUNE 2023
4
The phrase ‘football’s a game of two halves’ means that fortunes can change, which is an
appropriate metaphor for the performance of Ruffer Investment Company Limited (RICL or ‘the
Company’) over its financial year to 30 June 2023. As the Investment Manager’s report suggests,
however, we should be careful with a post-match analysis until after the final whistle – the
liquidity and recession risk concerns of the second half of the financial year have not yet abated.
In the first half of RICL’s financial year, the Company achieved a positive net asset value (NAV)
and share price total return of 4.8% and 4.1% respectively, despite a period of rising interest rates
which unsettled financial markets. In the second half, the RICL NAV and share price total returns
were -6.8% and -10.9% respectively, making -1.7% and -7.2% for the full year ended June 2023.
The main components of the negative NAV return were sterling strength against the yen, echoing
the RICL currency experience in 2007 (until the crisis arrived), and credit and equity protection.
The latter covered equity indices which were driven higher by only a limited number of stocks
which disguised more general market weakness, so despite widespread falls in stocks the portfolio
did not benefit from the cost of this protection.
The difference between the NAV and the share price returns reflected the change from a premium
of 1.7% to a discount of 3.1% over the year to 30 June 2023. The change in share price to NAV over
the eighteen months to end June 2023 was very similar (+1.8% to -3.1%) when, over that same
period, the average investment company discount moved out from -5% to -17% due to rising
interest rates and recessionary concerns. This was the widest average discount seen since 2007
when Ruffer’s strategy ultimately proved its value.
Long term returns
The compound annualised return from the Company’s launch in July 2004 to 30 June 2023 was
7.2% and RICL’s annual average NAV return relative to volatility risk remains towards the top of
its peer group of comparable investment companies over the Company’s life.
Chairman’s statement
5
Ruffer Investment Company Limited
A common statistic, which shows portfolio return in excess of the risk-free return relative to the
volatility incurred in achieving that excess return, is known as the Sharpe ratio. The Sortino Ratio
is similar, but measures return relative only to the downside (negative) element of volatility.
To 30 June 23 Sharpe ratio Sortino ratio
Ruffer Investment Company since inception (July 2004) 0.87 1.95
FTSE All-Share Total Return Index since July 2004 0.41 0.66
The Company’s risk-adjusted NAV return has remained over twice that of the FTSE All-Share
Index since the Company’s launch. In terms of the Sortino ratio, the Company has continued to
generate approximately three times more excess return per unit of risk than an investment in the
FTSE All-Share Index.
Dynamic correlation
Last year’s annual report focused on the part played by RICL as a diversifier when incorporated in
a portfolio of wealth. The chart below shows the correlation of RICL returns with those of the FTSE
All Share Index. It demonstrates that, in generally rising markets, the correlation moves towards
1.0, which implies that RICL has in the past captured upside when the equity market was rising.
When the market was falling, RICL protection strategies dramatically reduced the correlation to a
Source: Ruffer, Morningstar, Bloomberg. Constituents: Personal Assets, Capital Gearing, Aberdeen Diversified Income & Growth, RIT Capital Partners, BH Macro
NAV TOTAL RETURN VERSUS VOLATILITY, JULY 2004–JUNE 2023
Twice
Bank Rate
All-Share
6
point where the Company’s return was positive when the market’s return was negative. This chart
shows the historic value of having added RICL as a component of a wealth portfolio which includes
listed equities. This is a relationship which we anticipate will continue over the medium to long
term.
Earnings and dividends
During the year, the Company generated 3.70p per share of revenue and -13.23p per share of
capital losses. The Company has always invested for total return, which gives flexibility to the
Investment Manager to pursue the optimal investment strategy for the long-term generation of
return and the preservation of capital.
The Board is committed to distributing at least 85% of revenue earned in any given year to allow
the Company to remain able to be marketed to a UK retail client base. Having paid out an interim
dividend in March 2023, amounting to 1.35p per share, the Company has declared a second
interim dividend for this financial year of 1.65p per share. The remaining balance of revenue
earned has been retained to add to the revenue reserve which may be used to help protect
dividends against future fluctuations in revenue.
Source: Ruffer Investment Company Limited, FTSE International, data to 30 June 2023
DYNAMIC CORRELATION TO MARKETS
-1.0
-0.8
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1.0
0
100
200
300
400
500
600
700
800
2006 2008 2010 2012 2014 2016 2018 2021 2023
FTSE All-Share TR
RIC versus FTSE All-Share TR, rolling two year correlation (rhs)
7
Ruffer Investment Company Limited
Share premium and discount management
During the year, the Company gradually issued a total of 60,515,000 shares in order to –
1 meet ongoing demand in the market and to help to ensure that long-term investors who
regularly acquire shares are not disadvantaged
2 spread operating costs over a wider base
3 enhance NAV per share and
4 improve liquidity in the market, providing shareholders with flexibility in managing their
wealth where RICL is a component.
While the share price remained at a premium for most of the of year to end June 2023, it fell to a
discount in the second half. Your Directors sought shareholder permission at the annual general
meeting (AGM) in December 2022, as they do each year, to repurchase up to 14.99% of the issued
preference shares during the 12 months to the next AGM. Shareholders voted 100.00% in favour of
the resolution.
Board policy on buying in shares remains as follows. The Board is alerted by our broker to any
discount of share price to NAV greater than mid-single digits. At that point we might expect some
investors to trade the discount, taking a view on it narrowing and compounding positive
underlying performance which has occurred on the three previous occasions when the shares have
fallen to a sustained discount. Other investors may arbitrage between the Company’s shares and
units in the equivalent Ruffer open-ended fund.
The Board assesses with the broker the market position in the shares: who are the sellers; what are
their reasons; what are volumes which are moving the share price significantly relative to the
average liquidity levels; where are and what constitutes potential buyers and at what price level.
The Investment Manager is not appraised of this discussion because of potential conflict of interest
should they choose to buy the Company’s shares for their discretionary clients.
The Board makes its own independent judgement on whether it deems the discount to be a
temporary aberration, offering the opportunity to add value to shareholders through buy-back, or a
longer-term signal for which action other than a share buy-back may be required. While market
conditions did not permit a buy-back to occur in the year to 30 June 2023, 150,000 shares have
subsequently been bought into treasury.
Responsible investing
Ruffer LLP (Ruffer) has adopted the UK Stewardship Code 2020 definition of stewardship: ‘the
responsible allocation, management and oversight of capital to create long-term value for clients
and beneficiaries leading to sustainable benefits for the company, the environment and society’.
8
During the year, Ruffer consolidated several legacy policies and statements related to
environmental, social and governance (ESG) issues into a single document, the Stewardship and
Responsible Investment Policy. This document is publicly available and encapsulates the Ruffer
approach to ESG. Ruffer applies this philosophy through engagement which is defined as ‘active
dialogue with specific and targeted objectives’. The report on ESG (pages 36 to 41 of this Annual
Report) shows some examples of engagement in practice.
There is debate about the impact of ESG on performance but, since its launch in 2007, the MSCI
World ESG Leaders index has very marginally outperformed the straight MSCI World Index.
Apaper published in June this year by Victor Saint-Jean through SSRN, entitled ‘Exit or Voice’,
analysed over 3,000 US mutual funds between 2013 and 2020 for the relative effectiveness on
companies’ social behaviour of screening out anti-social behaviour or engaging with management.
The paper concluded in favour of engagement which was largely driven by the personal and
financial concerns of management when demanded by shareholders. Furthermore, it can be
argued that the type of risks identified by ESG analysis could lead to a substantial and sustained
draw-down in value if ignored. ESG is one of the ‘deep dive’ topics which the RICL Board reviews
with the Investment Manager regularly to ensure that action meets words.
Although RICL is not itself subject to Consumer Duty, the Investment Manager has performed an
assessment of value and this scored Green for cost, service and performance.
Board matters
In May 2023, we started a process leading to external review and evaluation of the Board and its
remuneration, led by the Senior Independent Director, Nick Pink. During the summer months an
extensive review of potential evaluators was conducted which led to the selection of Lintstock to
begin in September 2023.
The Lintstock evaluation involves a questionnaire, skills review and one-on-one interviews with
members of the Board and the Investment Manager. The evaluation is being conducted in the light
of my intention to stand down from the Board no later than the AGM in December 2024, after
eight years on the Board and four years as Chair.
One question being addressed by Lintstock evaluation is whether the Directors consider that the
role of Chair should pass to another member of the Board, or whether it might prove necessary to
recruit from outside. Meanwhile, the skills review will likely expose the need to replace my
buy-side experience while maintaining a majority of non-UK Directors on the Board.
9
Ruffer Investment Company Limited
The review, and in the new calendar year the recruitment process, will not only help us to continue
to meet the FCA’s specific targets on gender and ethnic diversity. It will also enhance that
important diversity of thought process, personality, skill and experience which provides the
mixture of chemistry that enables constructive challenge of both the Managers’ and the Board’s
own actions.
In the 2021 Annual Report, we stated that remuneration should not again be a barrier to selecting
the best candidate for the Board and that in future we would synchronise an external Board
evaluation and remuneration review at least every three years. We will be appointing an
independent adviser to review, and make recommendations on, Board remuneration before
recruitment begins. For further details, please refer to the Directors’ Remuneration report on
pages 65 to 67.
Outlook
In February this year I wrote in the Company’s Interim Report that ‘the Company’s investment
message for 2023 is an uncomfortable degree of financial market volatility demanding protection
and patience’. Protection and patience have come with a price in short term performance. This has
happened on several occasions in the past when geopolitical or economic events have made a
relatively shorter-lived and shallow impression on the long-term positive returns from
long-duration assets.
The Investment Manager’s report draws attention to Milton Friedman’s observation that monetary
policy works with long and variable lags, arguably made longer today by fixed rate mortgages and
expense of lockdown savings. Central banks are on a journey to reverse the inflation and excess of
risk-taking induced by zero interest rates. The current direction and articulation of monetary
policy remain firmly fixed towards slaying the inflationary dragon in the UK, Europe and the US.
The portfolio therefore remains defensive, but the time will come, perhaps ahead of forthcoming
elections on both sides of the Atlantic, when markets will begin to discount the policy pain and its
subsequent effect. The portfolio structure will need to reflect that light emerging at the end of the
tunnel when, as your Investment Manager says in its report, ‘It’s not the Fed that needs to pivot, it
will be investors’.
Christopher Russell
3 October 2023
10
The Company carries on business as a closed-ended investment company. Its shares are traded on
the Main Market of the London Stock Exchange (LSE) and it was admitted to the premium
segment of the Official List of the UK Listing Authority on 20 December 2005. The Company is
externally managed by Ruffer AIFM Limited, a UK investment manager authorised and regulated
in the conduct of investment business in the United Kingdom by the Financial Conduct Authority
(FCA). Ruffer AIFM Limited is also the Alternative Investment Fund Manager (AIFM) of the
Company.
Board
The Board of Directors is responsible for the overall stewardship of the Company, including
general management, structure, finance, corporate governance, marketing, risk management,
compliance, gearing, contracts and performance. Biographical details of the Directors, all of whom
are non-executive, are listed on pages 43 and 44 and in the Management and Administration
summary on page 131. The Company has no executive directors or employees.
The Board has contractually delegated to external parties various functions as disclosed in the
Corporate Governance Statement on pages 51 to 64.
Investment objective
The principal objective of the Company is to achieve a positive total annual return, after all
expenses, of at least twice the Bank of England Bank Rate.
The weighted average Bank of England rate throughout the year ended 30 June 2023 was 3.16%
(2022: 0.40%).
The Company predominantly invests in internationally listed or quoted equities or equity related
securities (including convertibles) or bonds which are issued by corporate issuers, supra-nationals
or government organisations.
Investment strategy
The Company’s strategy is to create a balanced portfolio of offsetting assets which in aggregate are
intended to enable the Company to meet its investment objective. The aspiration remains to
produce consistent positive returns, regardless of the performance of financial markets. Over
shorter periods this is likely to result in the Company lagging sharply-rising equity markets, but
outperforming falling equity markets. This strategy will be implemented predominantly through
investments in listed securities, collective investment schemes and currencies but the Investment
Manager has the flexibility to use other asset classes should it be necessary to do so.
Strategic report
11
Ruffer Investment Company Limited
The investment strategy has been tested in the last 18 months as conditions in markets have
changed quickly. In order to achieve the Company’s investment objective we need to be able to
perform in both rising and falling asset markets. This means that we maintain a balance of
investments with a small but potent book of cyclical equities to perform should economic and
financial conditions improve, index-linked bonds and gold to benefit from sustained higher
inflation and financial repression, and credit protection and options to protect the Company
should there be a shock to financial markets.
Investment policy
In selecting investments, the Company adopts a stock picking approach and does not adopt any
investment weightings by reference to any benchmark. Both the Board and the Investment
Manager believe that the adoption of any index related investment style would inhibit the ability of
the Company to deliver its objective.
The Company invests across a broad range of assets, geographies and sectors to achieve its
objective. This allocation will change over time to reflect the risks and opportunities identified by
the Investment Manager across global financial markets, with an underlying focus on capital
preservation. The allocation of the portfolio between different asset classes will vary from time to
time so as to enable the Company to achieve its objective. There are no restrictions on the
geographical or sectoral exposure of the portfolio (except those restrictions noted below).
The universe of equity, equity related securities or bonds in which the Company may invest is wide
and may include companies domiciled in, and bonds issued by entities based in, non-European
countries, including countries that are classed as emerging or developing. This may result in a
significant exposure to currencies other than pound sterling. Where appropriate, the Investment
Manager will also use in-house funds to gain exposure to certain asset classes.
The Company may use derivatives, including (but not limited to) futures, options, swap
agreements, structured products, warrants and forward currency contracts, for efficient portfolio
management purposes only.
Investment restrictions and guidelines
It is not intended for the Company to have any structural borrowing. The Company has the ability
to borrow up to 30% of the NAV at any time for short term or temporary purposes, as may be
necessary for settlement of transactions, to facilitate share redemption or to meet ongoing
expenses.
12
The proportion of the portfolio invested into companies based in emerging or developing countries
will be limited, at the time of any investment, to below 15% of the Company’s gross assets.
The Directors have determined that the Company will not engage in currency hedging except
where the Investment Manager considers such hedging to be in the interests of efficient portfolio
management.
The Directors have determined that no more than 15% in aggregate of the Company’s gross assets
at the time of acquisition will be invested in listed investment companies (including investment
trusts), with a maximum of 10% of gross assets invested in investment companies not having
stated investment policies allowing them to invest no more than 15% of their own gross assets in
other UK listed investment companies (including investment trusts).
General
In accordance with the requirements of the FCA, any material changes in the Investment Policies
and Objectives of the Company may only be made with the approval of shareholders.
Investment of assets
At each quarterly Board meeting, the Board receives a detailed presentation from the Company’s
Investment Manager which includes a review of investment performance, recent portfolio activity
and a market outlook. It also considers compliance with the investment policy and other
investment restrictions during the reporting year. The Company’s Top Ten holdings and Portfolio
Statement are on page 42 and pages 125 to 128 respectively.
Environmental policy
Whilst the Company has a limited carbon footprint in respect of its day to day activities, the Board
notes that the Investment Manager recognises that environmental responsibility is core to its
longer term business success, and actively integrates environmental, social and corporate
governance (ESG) issues into its investment process. The Investment Manager’s Stewardship and
Responsible Investment Policy is available upon request. For more detail, please see the
Responsible investment report on pages 36 to 41.
A number of environmental initiatives have been introduced by the Board and the Administrator,
as follows –
– minimising printing of Board materials
– deemed consent from shareholders to accept electronic copies of documents
13
Ruffer Investment Company Limited
– use of recycled paper for Annual and Interim Reports for shareholders requiring hard copies
and
– use of recycled Woodland Trust printer paper by the Administrator, which funds new UK
woodland.
In addition, during the year the Board has implemented a scheme to carbon balance Directors’ and
Investment Manager’s flights through the acquisition of verified carbon offsets.
Shareholder value
The Board reviews on an ongoing basis the performance of the Investment Manager and considers
whether the investment strategy utilised is likely to achieve the Company’s investment objective of
realising a positive total annual return, after all expenses, of at least twice the return of the Bank of
England Bank Rate. Having considered the portfolio performance and investment strategy, the
Board has unanimously agreed that the interests of the shareholders as a whole are best served by
the continuing appointment of the Investment Manager on the terms agreed.
Dividend policy
The Board’s policy is to pay dividends semi-annually, which are typically declared in October and
March, with an objective of retaining no more than 15% of the Company’s income each year.
Dividends will only be paid from the Company’s revenue account and not from capital. Dividend
payments by the Company will depend on the net income stream generated by the underlying
investments in the Company’s investment portfolio and therefore no assurance can be given that
dividends will continue to be paid.
The payment of any dividend by the Company is subject to the satisfaction of a solvency test as
required by the Companies (Guernsey) Law, 2008, whereby the Board must be satisfied on
reasonable grounds that the Company will, immediately after payment of any dividend, be able to
pay its debts as they become due and that the value of the Company’s assets would be greater than
the value of its liabilities.
The Board has the discretion to increase or reduce the dividend, or not to declare a dividend, as
appropriate in consideration of the financial position of the Company.
Details of the dividends paid during the year are set out in note 5 to the Financial Statements on
page 99.
14
Principal risks and uncertainties and their management
The Board has undertaken a robust assessment of the principal risks facing the Company and has
undertaken a detailed review of the effectiveness of the risk management and internal control
systems. As stated within the Report of the Audit and Risk Committee on page 70, the Board, with
the assistance of the Administrator and the Investment Manager, has drawn up a risk assessment
matrix, which identifies the key risks to the Company, and which is reviewed and updated by the
Audit and Risk Committee on a quarterly basis. The principal risks and uncertainties faced by the
Company, and the mitigating factors adopted by the Company, are summarised below. The Board,
together with the Investment Manager, regularly monitors relevant risks in relation to the ones
mentioned below.
Investment performance – the Company is exposed to the risk that its portfolio fails to perform in
line with the Company’s objectives. The Board reviews reports from the Investment Manager at
each quarterly Board meeting and at other times when expedient, paying particular attention to
the diversification of the portfolio and to the performance and volatility of underlying investments.
Investment strategy – the Company is exposed to the risk that the investment strategy it follows
ceases to be attractive to investors, with resultant selling causing the share price to fall, or that the
investment manager fails to consistently implement the investment strategy. The investment
strategy is set out in the prospectus and the Investment Manager has procedures in place to ensure
that it is consistent in managing the portfolio in accordance with the strategy. The Investment
Manager’s implementation of the strategy is reviewed by the Board at quarterly meetings, with
additional updates when required. Any amendments to the strategy are put to the Board for
approval. The Investment Manager, the Company’s Brokers and the Board regularly seek
shareholder views.
Financial risks – the financial risks faced by the Company include market risk – comprising
interest rate (see below), foreign currency and price risk – credit risk and liquidity risk. These risks
and the controls in place to mitigate them are reviewed at each quarterly Board meeting. Further
details on financial risks are discussed in note 19 of the Financial Statements on pages 110 to 122.
Interest rates – the Company is exposed to the risk that real interest rates rise unexpectantly
causing a significant drop in the value of the longer-dated, index-linked bonds held in the
portfolio. The Investment Manager constantly monitors the macro environment and situation
regarding real interest rates and reports frequently to the Board and acts in relation to the balance
of the portfolio accordingly.
15
Ruffer Investment Company Limited
Operational risks – the Company is exposed to the risks arising from any failure of systems and
controls in the operations of its service providers, principally the Investment Manager or the
Administrator. The Board receives reports annually from the Investment Manager and
Administrator on their internal controls and reviews pricing reports covering the valuations of
underlying investments at each quarterly Board meeting.
Accounting, legal and regulatory risks – the Company is exposed to the risk of action or sanction
by shareholders, counterparties or regulators if it fails to comply with the regulations of the UK
Listing Authority or the Guernsey Financial Services Commission or if it fails to maintain accurate
accounting records. Increased regulation (including climate change and ESG) may increase the
Company’s compliance burden and require changes to policies, procedures or disclosure
requirements. The Administrator provides the Board with regular reports on changes in
regulations and accounting requirements, including increased regulation relating to ESG and
climate change. The Board is also supported by access to and reporting from the Investment
Manager’s dedicated climate change specialists within their ESG team. These contribute to the
Board’s ability to maintain its awareness and knowledge of climate/ESG related reporting
requirements and its review of best practice for investment companies.
Geopolitical risks – the Board is mindful of current and emerging geopolitical risks such as the war
in Ukraine; US/China tensions; energy politics in the Middle East. Escalation of risks might lead to
severe disruption of global supply chains of critical raw materials and technology and affect the
company’s portfolio accordingly. The Investment Manager continually monitors developments and
reports frequently to the Board and would act in relation to the balance of the portfolio
accordingly.
Climate change – the Board is concerned by the potential for physical and transition risks which
could have material impacts on valuations within the portfolio. The Board is aware of the
reputational risk associated with managing these issues. The Investment Manager has climate
specialists within their ESG team who actively engage with potential and existing investee
companies to establish climate risks and improve resilience.
Fraud and cybersecurity – fraud or large-scale network disruption such as hacking, malware,
phishing, disrupted denial of service attacks could be disruptive to the Company and also pose a
reputational risk if they are not dealt with effectively. The Company’s Board is provided with
regular updates on any cyber security issues from its service providers and how they are managing
the risk. All access to the offices of service providers is strictly controlled and Data protection
policies are in place.
16
Service provider continuity – the Company is exposed to the risk that staff turnover or M&A
activity at the Administrator, Company Secretary or Broker affects service delivery. The Board
reviews the performance of the Service Providers on a regular basis to ensure it remains
comfortable that the Service Providers employ qualified staff with extensive knowledge of the
regulatory environment applicable to the Company. The Board can and does receive explanations
and assurances from its key suppliers as to their own operational resilience and plans and ability to
respond during times of crisis.
Emerging risks – the Board is constantly alert to the identification of any new or emerging risks
through the monitoring of the Company’s investment portfolio and by conducting regular reviews
of the Company’s risk assessment matrix. When an emerging risk is identified, the risk assessment
matrix is updated and appropriate mitigating measures are agreed. No emerging risks have been
identified during the course of the year.
ESG is monitored within the Risk register but it is not in itself considered to be a principal risk.
The Board assesses its impact on the Company’s other risks, including investment risk and
reputational risk, and reviews the mitigants that are in place.
The Board has considered the impact of climate change on the Company and believes that it does
not give rise to a material impact on the financial statements of the Company.
The Board remains ultimately responsible for the identification and assessment of risk as well as
implementing and monitoring procedures to control such risks where possible. The Board seeks to
mitigate and manage these risks through continual review, policy-setting, enforcement of
contractual obligations and monitoring of the Company’s investment portfolio.
Going concern
The Directors believe that it is appropriate to continue to adopt the going concern basis in
preparing the Financial Statements since the assets of the Company consist mainly of cash and
cash equivalents and securities which are readily realisable. The Directors also note that overall,
due to the nature of the Company’s portfolio, which – as discussed in more detail in the
Performance section of the Chairman’s Review and in the Investment Manager’s report –
comprises both equities and other more defensive assets, it has not been affected significantly in
terms of value or cashflows by the effects of the Russian invasion of Ukraine, or the cost of living
crisis and rising interest rates arising from the current high-inflation economic environment.
Accordingly, in the Directors’ opinion, the Company has adequate financial resources to continue
in operational existence for the foreseeable future. Matters relating to the going concern basis are
also discussed in the Long Term Viability Statement below and note 2(c) on page 92.
17
Ruffer Investment Company Limited
Long term viability statement
The Directors have assessed the prospects of the Company over a longer period than the 12 months
minimum required by the ‘going concern’ provision. For the purposes of this statement, having
regard to the economic planning cycle and the Company’s strategy review period, the Board has
adopted a three year viability period.
In its assessment of the Company’s viability over the three year period the Board has considered
each of the Company’s principal risks as detailed above and any emerging risks, and in particular
the impact of a significant fall in the value of the Company’s investment portfolio.
The Directors consider that a 30% fall in the value of the Company’s portfolio would be significant
but would have little impact on the Company’s ability to continue in operation over the next three
years. In reaching this conclusion, the Directors considered the Company’s expenditure
projections, the fact that the Company currently has no borrowing, but has the ability to borrow up
to 30% of its NAV and that the Company’s investments comprise predominantly readily realisable
securities which can be expected to be sold to meet funding requirements if necessary, assuming
market liquidity continues.
Also, the Board has assumed that the regulatory and fiscal regimes under which the Company
operates will continue in broadly the same form during the viability period. The Board speaks with
its Broker and legal advisers on a regular basis to understand issues impacting on the Company’s
regulatory and fiscal structure. The Administrator also monitors changes to regulations and
advises the Board as necessary. The Board also has access to the Administrator’s compliance
resources as well as the compliance department of the AIFM.
Based on the Company’s processes for monitoring operating costs, share discount, internal
controls, the Investment Manager’s performance in relation to the investment objective, the
portfolio risk profile, liquidity risk and the robust assessment of the principal risks and
uncertainties facing the Company, the Board has concluded that there is a reasonable expectation
that the Company will be able to continue in operation and meet its liabilities as they fall due over
the three year period.
Key performance indicators
The Board uses a number of performance measures to assess the Company’s success in meeting its
objectives. The key performance indicators are disclosed in detail on page 3.
18
Performance review
The NAV total return for the financial year to 30 June 2023 was -1.7% and the share price total
return was -7.2%.
The NAV total return for the six months to 30 June 2023 was -6.8% and the share price total
return was -10.9%.
The annualised NAV total return since inception of the Company in 2004 is 7.2%, which is in line
with UK equities, but with a much lower level of volatility and drawdowns.
The notable gaps between the share price and the NAV total return numbers are driven by the
Company swinging from a peak premium of 4.7% in September 2022 to a discount of 4.6% during
June 2023. The shares closed the period at a discount to IFRS NAV of 3.1%. This is the first time
the Company has traded on a sustained discount since 2020.
On the back of several strong years, there is no hiding from the disappointing numbers delivered
during this period. Since the beginning of the current rate hiking cycle – an inflection point in the
market regime – performance is still ahead of global bonds and equities.
RUFFER PERFORMANCE VERSUS GLOBAL EQUITIES AND FIXED INCOME
Source: Ruffer Investment Company Limited, Bloomberg, data to June 2023. Global equities represented by FTSE All World Index Total Return, GBP.
Global bonds represented by Bloomberg Global Aggregate Total Return, GBP.
80
85
90
95
100
105
110
Jan 2022 Mar 2022 May 2022 Jul 2022 Sep 2022 Nov 2022 Jan 2023 Mar 2023 May 2023
RIC NAV TR
Global bonds
Global equities
Investment Manager’s report
19
Ruffer Investment Company Limited
We share in the pain of our shareholders in having lost money over the past year and acknowledge
this represents a failure of our objectives. We hope that this report will allow you to share in our
optimism for the coming period.
However, as NFL Hall of Fame quarterback Troy Aikman said, “Things are never as good as you
think they are or ever as bad as you think they are.”
We should not do a post-match analysis when the game is still ongoing, but it is worth reflecting on
the drivers of negative performance in the year to date. We came into the year concerned about
liquidity withdrawal and recession risks. We would contend these concerns were justified then and
are still justified now. Our principal mistakes arose in the expression of these views. If one was
bearish, it was possible to sit in treasury bills and earn 4%. We held around 35% of the portfolio in
cash or other short-term assets during the period whilst also pursuing our usual balance of
protection and growth assets. Unfortunately our protection and growth scales have been
miscalibrated for much of the latter part of the reporting period.
Two factors have hurt the portfolio. Firstly, the surge in dispersion, so that only a narrow element
of growth and equity assets, dominated by technology (as in 1999 and 2020), powered the indices
higher. As a result, the oil and commodity exposure held did not offset the costs of protection.
Worse, they increased the drag on performance. The silver lining is that current high levels of
dispersion should offer rich pickings for active managers going forward.
Source: Empirical Research
US VALUATION SPREADS, TOP QUINTILE COMPARED TO THE MARKET AVERAGE
-2
-1
0
1
2
3
4
5
6
1925 1931 1937 1943 1949 1955 1961 1967 1973 1979 1985 1991 1997 2003 2009 2015 2021
Recession periods
Valuation spread
20
Secondly in currencies, a double whammy – yen weakness and surprising sterling strength. This is
a direct echo of our experience in 2007, where holding the Swiss franc and yen cost the portfolio
until the crisis came and they rose spectacularly, just when we needed them.
So, in 2023 we have faced a combination of the headwinds that made life difficult before the last
two major market crises. The challenge is that we face them concurrently today and with the
additional cost of holding credit and equity protection that has a negative carry. But we have been
here before. Feeling uncomfortable is necessary if seeking to perform differently from the crowd.
Crucially though, a significant chunk of the losses are unrealised and we believe these are still in
play.
Premium/discount
There have been four significant periods where Ruffer Investment Company has traded on a
discount since 2004, including today.
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Premium
Discount
+5%
-5%
100
120
140
160
180
200
220
240
260
280
300
320
Price
NAV
Source: Ruffer Investment Company Limited, data to 30 June 2023
PREMIUM/DISCOUNT
21
Ruffer Investment Company Limited
Buying RICL on a discount has been a strategy with a high hit rate. On those four significant
occasions, the three year share price performance invariably bounced back handsomely.
Performance contributions for six months to 30 June 2023
Given the Company’s defensive posture coming into 2023 and the unexpected strength of equity
markets, our protective assets dragged in the six months to 30 June. Option protection via the
Ruffer Protection Strategies Fund cost -2.6%, driven mostly by equity puts and volatility index
(VIX) call options (equity volatility has fallen remarkably, down 30% since its May peak and back
to pre-pandemic levels). Credit protection, held via the Ruffer Illiquid Multi-Strategies Fund 2015
Ltd, also cost as spreads remained tight, contributing -1.7%. Sterling strength, particularly against
the yen, weighed on performance. Non-sterling currency exposure cost -2.5% to performance.
What has perhaps been more frustrating is the lack of offset. Firstly, a low equity weight has been
insufficient to balance out the cost of protection. Secondly, as noted, performance in equity
markets has become increasingly concentrated, with markets driven by a very narrow group of
stocks to which we have had limited exposure. The small bright spot has been modest allocations
to Meta Platforms (+138%) and Amazon (+55%), along with the positions in Japanese equities
such as Sony (+30%) and Mitsubishi Electric (+57%). Additionally, our exposure to commodities
and equities more geared to the real economy have suffered from recession fears and a lacklustre
China re-opening. Our exposure to Brent crude oil and copper exchange trade commodities (ETCs)
cost -0.6% over the period in question.
Finally, higher long-term interest rates in the UK and the US have hurt the allocation to
inflation-linked bonds, the long-dated index-linked gilts costing -0.7% in performance terms.
Despite the rise in real yields, gold exposure and gold equities were a positive contributor adding
+0.2%.
Performance contributions for 12 months to 30 June 2023
The drivers of performance over 12 months were broadly similar to those shaping the first half of
2023. Equities delivered +2.3% to performance, with BP being the largest single contributor
(+0.5%). The position has gone from a 2.4% weighting to 0.5% over the period, with energy being
one of the key areas reduced as part of a wider de-risking of the portfolio.
Gold exposure and gold equities added +0.2%. We were active in trading the metal over the
12-month period, reducing exposure by 6% over the first three months as we became nervous of a
liquidation in asset markets. The position was rebuilt at the start of 2023 back up to 7.5% but we
steadily took some profits as dangerous liquidity dynamics have reasserted themselves.
22
As with the last six months, the credit protections and commodity exposures dragged performance,
costing -3.5% and -0.5% respectively.
The exceptions were our index-linked exposure and our derivatives.
In the last quarter of 2022, we actively traded index-linked gilts (including through the September
turmoil) which added meaningful performance. We also increased exposure to long-dated US
inflation-linked bonds at the lows and enjoyed the recovery as real yields fell in the last few months
of the calendar year.
With regards to the derivatives, interest rate option protection continued to benefit as it did in the first
half of 2022 from sharply rising interest rates, as well as our equity downside protection – a Tesla put
adding +0.1%. In the period, we also used upside derivative exposure to tactically increase equity
exposure into the bear market rallies, with an S&P500 call spread contributing +0.8%.
-4.3
-2.5
-0.7
-0.6
0.2
0.6
0.9
Protection
strategies
and derivatives
Non-sterling
currency
exposure
Commodity
exposure
Inflation-linked
bonds
Gold exposure
and gold equities
Nominal bonds
Equities
PERFORMANCE ATTRIBUTION
30 JUNE 2022 – 30 JUNE 2023 (12M)
% CONTRIBUTIONS
31 DECEMBER 2022 – 30 JUNE 2023 (6M)
% CONTRIBUTIONS
Source: Ruffer Investment Company Limited. Percentage contribution to portfolio returns. Totals may not equal NAV total return performance due to rounding, attributions showing gross of fees
and in local currency terms.
-2.0
-1.5
-0.5
0.2
0.6
0.6
2.3
Non-sterling
currency
exposure
Protection
strategies
and derivatives
Commodity
exposure
Gold exposure
and gold equities
Nominal bonds
Inflation-linked
bonds
Equities
23
Ruffer Investment Company Limited
Portfolio changes
In recent months, we have further moved the portfolio into a defensive posture, given we believe
investors face the twin threats of recession and a withdrawal of liquidity from financial markets.
These adjustments included –
1 Reducing equities to a 14% weighting, whilst simultaneously increasing equity downside
protection by adding index put options and VIX call options, the first time we have allocated to
these instruments since 2020.
2 Increasing portfolio duration, primarily by adding to long-dated US inflation-linked bonds. We
have high conviction that the rise in real yields is likely to prove temporary and too much for
financial markets (and the economy) to handle and thus expect lower real yields to follow.
3 Increasing exposure to the yen and US dollar, currencies we expect to appreciate in a period of
market stress.
4 Reducing gold and copper exposure.
Investment outlook
The cyclical
The recession, when it comes, will arrive with a sudden thud. Sentiment, valuation and market
narratives are akin to an echo-bubble of 2021. The pessimism of 2022 has been forgotten and the
markets are pricing a soft landing fuelled by AI-driven productivity improvements.
The key dynamic is that monetary policy and liquidity withdrawal work with Milton Friedman’s
infamous long and variable lags, but their inevitable bite on economic activity and asset prices is
coming. Perhaps, in our caution, we underestimated the willingness of the US consumer to keep
spending in a strong labour market. The evolution of the UK mortgage market from predominantly
variable, to predominantly fixed rate deals, has increased the time between a rate rise and the
impact on consumer finances. Further, accumulated lockdown savings have offset the cash flow
squeeze from inflation and interest rates. This buffer could either attenuate the pain or delay the
reckoning; having been mostly spent it now seems likely it will be the latter.
24
The past 18 months have seen the largest globally synchronised, monetary tightening cycle for over
a generation – and it isn’t over yet. There are more hikes to come. Furthermore, the market has yet
to price in the higher for longer rates that policymakers are now promising.
Not many would have predicted rates could rise 500 basis points in the US and markets would be
within 10% of their all-time highs and the economy would not be in recession. If the economy and
markets can handle higher rates, why did we spend 14 years at zero interest rates? But remember
we still have negative real rates in the UK and Europe and barely positive real rates in the US so
arguably policy is too loose. No interest rate cycle in history has ever ended with negative real
rates, so either inflation has to come down hard or rates are going to keep going up.
And it isn’t just rates either – there are other monetary policy levers at play draining liquidity from
the system – we also have the unwind of quantitative easing via quantitative tightening at
US$95bn per month and the refilling of the Treasury general account which will take net bill
issuance to circa US$550bn in the third quarter.
In addition to which, earlier this year we published Blood on the tracks (ruffer.co.uk/blood-on-the-
tracks), about the no-win situation currently faced by policymakers. Central bankers have
Source: Datastream, data to November 2022
CHANGE IN MONETARY STANCE ACROSS DEVELOPED MARKETS, LAST 12M BPS
(BASIS POINTS)
-400
-300
-200
-100
0
100
200
300
400
500
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
25
Ruffer Investment Company Limited
competing goals: on the one hand, efforts to forestall a banking crisis; on the other, bringing
inflation down to target. The first requires monetary policy easing, the second monetary policy
tightening. Policymakers face an impossible but unavoidable choice – let inflation take root, or act
and risk a financial system calamity.
There is an old aphorism that the Fed always tightens until something breaks. Despite the ebullient
backdrop there is no doubt that the highly leveraged financial system is creaking, and cracks are
emerging. In Q4 2022 we had the liability-driven investments (LDI) meltdown in the UK gilt
market, followed swiftly by the collapse of FTX in one of the largest corporate frauds in history.
The first quarter of 2023 made those look rather sedate as three of the top 30 US banks succumbed
to deposit flight and Credit Suisse was hastily shotgun wedded to UBS over a weekend in a bailout
eerily reminiscent of the financial crisis.
These things are a process, not an event. When referencing the global financial crisis, one likely
thinks of September 2008. Yet events began to unfold in September 2007 with Northern Rock,
then there were six months before Bear Stearns, then another six months before Lehman Brothers
and then another six months before the market bottomed in March 2009. The S&P 500 had
several rallies of greater than 10% but each one was a false dawn as crisis re-asserted itself and
dominos began to fall. Experienced investors were lulled into believing the worst had passed, that
sub-prime was contained and that a soft landing was assured.
Currently markets are increasingly certain that policy makers will be able to bring inflation back to
target and will do so without creating any financial instability: the much-fabled soft landing
alongside an immaculate disinflation. Yet it would be highly unusual for the inflation bogeyman to
be slain with household net worth rising, unemployment still at record lows and without a
recession.
The case for a recession
The evidence is strong that we are approaching a developed world recession. We will look back and
say the signs were there; markets chose, temporarily, to ignore them. Specifically, what are we
referring to?
1 Yield curves are deeply inverted around the globe – a reliable predictor of recessions
2 A substantial and abrupt hiking cycle – 500bps on Fed Funds Rate plus quantitative
tightening, probably amounts to at least 600bps of effective ‘tightening’. Plug that tightening
into any macro model and you get a substantial drag on growth
26
3 The Fed and other central banks have admitted a recession is a price worth paying to tame
inflation
4 The US personal savings rate has collapsed to the lowest level since 2013 and pandemic excess
savings are running out. (see ‘excess savings’ chart below)
5 Savings and Loan Officers Survey showing significant tightening of credit conditions/banks
willingness to lend only previously seen in recessions (see ‘credit conditions’ chart below)
6 Bank failures, deposit flight and tightening of capital requirements are constraining ability to
lend
7 Cracks appearing in the US labour market with average hours worked falling, and temporary
worker reductions at 30 year highs
8 The inventory to sales ratio in the US is at a 25 year high
9 Broadly measured economic activity is heading in the wrong direction (see ‘US economic
activity’ chart below)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Jan 20 May 20 Sep 20 Jan 21 May 21 Sep 21 Jan 22 May 22 Sep 22 Jan 23 May 23
ESTIMATED STOCK OF US PERSONAL SECTOR ‘EXCESS SAVING’, % OF PCE
(PERSONAL CONSUMPTION INDEX)
Source: BEA, Ruffer calcs, sum of gaps between current value and pre-covid trend of underlying components of personal sector income/outlays, PCE excludes imputed outlays
27
Ruffer Investment Company Limited
An update on the liquidation thesis
Last summer our CIO Henry Maxey wrote that markets were vulnerable to a liquidation
(ruffer.co.uk/misplaced-money).
CREDIT CONDITIONS ARE WORSENING
Large and medium firms (inverted, 6m forward). Source: S&P Global, Federal Reserve System. Data to September 2023
-90
-70
-50
-30
-10
10
30
50
-40
-30
-20
-10
0
10
20
30
40
50
1999 2003 2006 2009 2013 2016 2019 2023
S&P 500 EPS, % yoy
SLOOS: Net % of domestic respondents tightening standards for C&I lons (rhs)
US ECONOMIC ACTIVITY
Source: FactSet, data to June 2023
25
30
35
40
45
50
55
60
65
70
2000 2003 2006 2010 2013 2016 2020 2023
Overall
New orders
Order backlogs
Employment
28
Like the recession, this is taking slightly longer than we expected to materialise, but events are
moving our way. It might not feel like it, but we are in a banking crisis. This chart shows the gap
between the Fed funds rate offered via money market mutual funds and the rate offered on deposit
by banks. It is at a 40 year high.
FED FUNDS RATE AND US NATIONAL DEPOSIT RATES
Source: FactSet. Federal Reserve Bank of New York. US Federal Deposit Insurance Corporation. Data to June 2023
0
1
2
3
4
5
2012 2014 2015 2017 2018 2020 2021 2023
%
Deposit rate
Fed Funds target rate, upper bound
EXCESS YIELD ON MONEY MARKET MUTUAL FUNDS (MMMFs)
Source: SEC, Refinitiv, Centre for Financial Stability, Federal Reserve, bankrate.com. Data to May 2023
-100
0
100
200
300
400
500
600
700
1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023
29
Ruffer Investment Company Limited
Investors can achieve a huge uplift in yield and reduce their counterparty risk by moving money
from bank deposits to money market funds or treasuries. It is therefore no surprise that US$750bn
has fled US bank deposits since June 2022. This flight is entirely rational. But like a tragedy of the
commons, what is good for one, will be deleterious to the whole.
This is important. In caricature, if cash is deposited at JPMorgan then it is used to fund their
investment bank and is fired around financial markets. Money at a regional bank might be used to
fund small enterprise loans and commercial property. If that money ups sticks and moves to
money market funds and government bonds – it loses its monetary velocity. Money is being sucked
towards the centre of the financial system which reduces the risk-taking capacity of the system as a
whole and reveals fragilities in the peripheral institutions.
Another element of the liquidation process is that investor portfolios have not yet moved to reflect
the new economic reality.
The chart below shows what portfolio an investor would have to own to earn a 7% expected return.
In 1991, effectively all cash. In 2006 a low risk multi-asset blend. By 2021 investors had to be all-in
on risk assets.
Originally, we used this chart as a warning that investors were taking too much risk in a world of
zero interest rates, the entire investment industry had iterated towards the riskiest end of their
mandates to chase those returns. This was beautifully put to us by an American endowment who
said their “public market guys were doing privates, their privates were doing venture and their
venture guys were doing crypto.”
ESTIMATES FOR PORTFOLIO INVESTORS TO EARN A 7% RETURN
Source: Callan Associates
17%
13%
37%
23%
7%
3%
1991 2006 2021
2%
98%
20%
13%
4%
63%
Cash
US fixed income
US fixed income
US small/mid-cap
Global ex-US equity
US large cap
US small/mid cap
Global ex-US equity
US large cap
Real estate
Private equity
US fixed income
30
Today, we are on a journey to reverse the excess of risk taking forced by zero interest rates. We
have gone from a world of ‘there is no alternative’ to a world of many alternatives – this is a
profound change.
Every asset allocator or investment committee in the world is looking at this data. The conclusion
is that they no longer need to own the same quantity of risk assets to hit their expected return
target. A 7% expected return portfolio could have a near zero weighting in equity.
So what? The danger is that everyone is pointing in the same direction, seeking to move from risky
assets to less risky assets, potentially all at once. If everyone is a seller, who is the buyer? We worry
about a global, synchronised de-risking of portfolios. This isn’t about the investment merits of
individual asset classes, this is a profound change in the landscape in which people seek to achieve
their investment objectives.
The secular
The evidence continues to mount that we have entered a new investment regime of higher and
more volatile inflation. The economic landscape has shifted to deglobalisation, renewed labour
bargaining power and conflict between the ‘great powers’.
It is clearer than ever that we have shifted to a more interventionist, age of emergencies. First it
was covid, then empty supermarket shelves, the climate emergency, Ukraine, the energy crisis, the
cost-of-living crisis, the regional banking meltdown and the mortgage apocalypse. Each iteration is
met with a clamour for government action to whack-a-mole the problem with a fiscal response.
Political parties both left and right have become interventionists, with only the flavour of the
solutions varying. The ‘invisible hand’ is being replaced by the ‘visible hand’ of government
directed capitalism.
“So inflation must go. Ending it cannot be painless. The harsh truth is that if policy isn’t hurting, it
isn’t working.” Sir John Major, 1989
This austere sentiment is hard to imagine from a politician today. The Bank of England raises
rates, and the government responds to knee-jerk popular demands to implement an offsetting
relief package thereby short circuiting the effects of the tightening. There is simply not the political
or popular appetite for the sustained restrictive monetary policy that would be needed to properly
deal with these new inflationary forces. The consequence is an ameliorated recession, stickier
inflation and ever-growing debt and deficits.
There are two near certainties for which we believe the evidence is mounting. Democracies choose
inflation as the least painful path of deleveraging, and politics trumps economics. The inflation
31
Ruffer Investment Company Limited
fighting orthodoxy and resolve of central bankers will be much harder to maintain in the face of
recession and political pressures as we get closer to the 2024 elections on both sides of the pond.
The track record of incumbents winning when the economy is in recession is very poor.
Looking through short-term cyclical oscillations, we expect nominal interest rates to stay elevated
for longer but could see negative real yields and unstable correlations between asset classes for
quite some time to come.
What is so interesting is that this is all beginning to feel inevitable and yet the market remains
incredibly sanguine about this new world dis-order with prices reflecting the opposite end state.
This is the 30 year US breakeven inflation rate – what the market thinks inflation will be on
average plus a risk premium for uncertainty about the future path of inflation.
We think this is either a remarkable endorsement of central banker credibility or a failure of
imagination on the part of the market. Despite the litany of surprising events in the last few years
from Brexit to Trump to lockdowns and 40 year highs on realised inflation, long term inflation
expectations are anchored and in line with the ‘old regime’ average of the last 20 years of
around 2%.
US 30 YEAR BREAKEVEN RATE, %
Source: FactSet, Federal Reserve of St Louis, data to June 2023
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
32
This is the opportunity. We have a variant perception from the market and if that is right there is
significant money to be made. One of the most attractive investment themes in coming years will
be finding various ways to be long realised inflation versus implied inflation. But first we must
navigate the disinflationary lurch of a recession.
Portfolio shape
The uncertainty of the economic, inflation and policy outlook, in the context of an unusual cycle,
means we must acknowledge the possibility of the immaculate disinflation. But we wouldn’t want
to bet on it. We have high conviction in our view, even if sentiment and pricing have moved against
us in the short term.
Not participating in risk assets is easier when valuations don’t reflect the risks we observe. The
portfolio has a record low equity weighting of 14% because the equity risk premium looks
remarkably low.
Howard Marks has said that you can have good news or good prices, but not both. We believe US
equities in particular offer bad news and bad prices.
US EARNINGS YIELD VERSUS FED FUNDS
Source: FactSet, Ruffer LLP, data to June 2023
-3
-2
-1
0
1
2
3
4
5
6
7
8
9
10
11
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
%
Equity/cash premium
Fed Funds target rate, upper bound
S&P 500 current earnings yield
33
Ruffer Investment Company Limited
Where we are taking risk is in commodities. What if stability is maintained? For this to happen
economic growth will need to surprise on the upside. This makes oil and other commodities a key
component of our growth assets. We have around 7% in energy assets. The US Strategic Petroleum
Reserve has been run down and will need to be rebuilt. There are strong hints the Chinese
Strategic Petroleum Reserve may also have been opened. OPEC+ production cuts are imposing
supply discipline on the market. Financial positioning has been blown out, sinking to levels not
seen since 2007. We believe the asymmetry is in our favour: commodities seem to be pricing in a
recession; equities are not.
On the other side of the book, the protections in the portfolio are of three types. Structural
protection against a new regime which is likely to be characterised by rising and more volatile
levels of inflation; shorter-term (and powerful) unconventional protections against the potential
financial instability caused by tighter liquidity and higher interest rates; and protection against the
likely recession that will follow. Taking a cautious view can be painful, but history tells us that not
long after these periods the risks emerge which lead to significant drawdowns in markets.
We have a 16% exposure to the yen which offers a very interesting situation. Historically, the yen
has been a safe haven currency – it rose by 48% against GBP in the global financial crisis.
W
TI CRUDE OIL, $/BBL
Source: FactSet. Data to June 2023
60
70
80
90
100
110
120
Feb 22 Apr 22 Jun 22 Aug 22 Oct 22 Dec 22 Feb 23 Apr 23 Jun 23
‘Biden put’ at $67-72 per barrel
June 2023
Saudi Arabia
announce further
output cut
April 2023
OPEC+ announce
surprise cuts to
oil production
October 2022
White House states
intention to begin refilling
the SPR when WTI falls to
$67-72 per barrel
34
Therefore, a yen allocation should add defensive characteristics to a portfolio. The setup is
attractive because the currency is cheap on conventional valuation metrics and sits at its lowest
level against GBP since 2015 and since 1998 against the USD. We have an imminent catalyst in
that there has been significant monetary policy divergence recently and the new Bank of Japan
governor will likely be forced to end yield curve control – the main driver of yen weakness. This
should lead to Japanese bonds down and currency up, which should also benefit our small position
in Japanese rate payer swaptions.
In the unconventional toolkit, the prospects from here for VIX calls, equity puts and credit
protection to punch as hard as they did in 2018, 2020 or 2022 is tantalising.
The portfolio remains highly liquid and defensive as we wait for better opportunities to emerge, we
believe in the coming quarters. After a 2023 rebound, asset allocators can convince themselves
2022 was an aberration for the 60/40 portfolio and therefore new, more thoughtful portfolio
construction and diversification efforts are not required. We believe this is a mistake – gold,
commodities, negative duration (via payer swaptions), asymmetric hedges and the ability to be
short equities will all be useful tools in the toolkit.
In summary, the portfolio needed today – low gross, defensive – to survive the oncoming recession
and liquidation is not the portfolio needed in 12-18 months when the economy is recovering and
stimulus is back on the table. It’s not the Fed that needs to pivot, it will be investors.
Ruffer AIFM Limited
3 October 2023
35
Ruffer Investment Company Limited
The Board recognises the increased scrutiny related to environmental, social and governance
(ESG) issues placed on asset managers by regulators, clients, non-government organisations and
special interest groups.
This increased scrutiny is warranted both from a consumer protection and a fiduciary duty
perspective, especially given the absence of a universally accepted definition of ESG. ESG is
implemented differently across the investment industry and there is a broad range of terminology
(not limited to stewardship, responsible investment, sustainable investing) which inhibits shared
understanding. Here we attempt to provide clarity on RICL’s understanding and application of
Responsible Investment.
During the year, Ruffer consolidated several legacy policies and statements related to ESG into a
single document, the Stewardship and Responsible Investment Policy (ruffer.co.uk/stewardship-
policy) which is publicly available and encapsulates the Ruffer approach to ESG. As a value-
focused asset manager, Ruffer chose not to name it an ESG policy, as they believe this name can be
misconstrued. ESG simply refers to an array of factors, topics, themes or metrics which may relate
to values (ethics and morals) and value (return or risk). Responsible Investment integrates
potentially material ESG factors with investment decisions and stewardship which includes
engagement and proxy voting.
Ruffer retained its status as a signatory of the UK Stewardship Code for a second consecutive year
and remains a signatory to the Principles for Responsible Investment (PRI). In 2022, Ruffer joined
the Net Zero Asset Managers Initiative (NZAM) and, in March 2023, confirmed targets under this
initiative. Ruffer are members or supporters of the Climate Action 100+, the Transition Pathway
Initiative (TPI) and the Institutional Investors Group on Climate Change (IIGCC).
Ruffer’s approach to investing responsibly
RICL implements its investment strategy through an active, unconstrained and multi-asset class
approach.
In simple terms, activities related to stewardship and responsible investment aim to support, not
detract from, achieving investment objectives. Ruffer looks for red flags, not red lines. It means
Ruffer aspires to be consistent, clear and credible in relation to voting and engagement, integrating
ESG factors into investment decisions where they are relevant and potentially material (subject to
the limitations outlined below).
Climate-related risk is the key macro ESG risk facing investors. It remains challenging to quantify
what climate change means for asset class risk and returns and it is difficult to price. Therefore,
Responsible investment report
36
like all the ‘known unknowns’, Ruffer seeks to position asset allocation to be resilient to shocks,
whilst delivering the investment objectives. Fundamental analysis is where Ruffer implements the
majority of its stewardship and responsible investment activities.
The practical application of Ruffer’s approach to responsible investing can be demonstrated by
considering each of the three core pillars of the portfolio in turn.
Equities and commodities
ESG considerations are incorporated into the investment approach, through analysis of risks and
opportunities that might impact the value of RICL’s equity holdings. Information from company
reporting is supplemented with MSCI ESG Research, Institutional Shareholder Services (ISS), CDP
analyses and other sources to identify material factors that may affect an investment. These factors
are actively considered alongside fundamental equity analysis. Topics or themes material to the
investment case are identified and Ruffer may seek to engage with the company to gather more
information or to push for change.
Ruffer engages both individually and collaboratively, where the latter may provide a platform to
engage on wider sector, regulatory and policy matters with investors and other stakeholders.
Active proxy voting is a key tenet of good governance. Voting on resolutions is an obligation of
ownership and shows support or signals need for change to company board and management.
Ruffer reviews relevant issues and exercises judgement, aiming to be clear, consistent, and
thoughtful when voting.
RICL gains exposure to commodities mostly through ETCs, instruments based on futures contracts
for the underlying commodity. The main underlying exposure has been to Brent crude oil and
copper. Ruffer is well aware of the ESG issues, specifically environmental and human rights
concerns, associated with these commodities but further than conducting due diligence on the
issuer of these instruments, Ruffer is unable to influence or assess the materiality of ESG issues.
These instruments do not confer ownership rights so there is no legal basis upon which to integrate
ESG analysis or undertake stewardship activities.
Fixed income and gold
Ruffer developed a proprietary tool to rank sovereign debt issuers using a selection of ESG factors.
The inflation-linked bonds of these issuers form part of the fund. The framework consists of
including country-level indicators such as environmental risk, human development, and
corruption into a ranking model. Ruffer has limited ability to enact change through engagement as
holders of sovereign bonds.
37
Ruffer Investment Company Limited
RICL does not undertake any stewardship or responsible investment activities related to RICL’s
holdings in gold bullion.
Protection strategies and cash
The protective portion of the portfolio is made up of derivatives, credit securities and cash with
interests in indices, rates or currencies which may not directly relate to any one company, issuer or
security. ESG analysis is not currently conducted on these holdings. There is not yet industry
consensus on how ESG factors might be considered in the process for selecting these instruments,
but developments in the space are being monitored.
More detail on Ruffer’s stewardship and engagement activities is laid out in the firm’s annual
Stewardship Report (ruffer.co.uk/2022-stewardship-report).
The Net Zero Asset Managers Initiative
One focus of Ruffer’s responsible investment efforts over the last 12 months has been increased
attention to climate risk and the energy transition. Ruffer acknowledges the need to shift the
economy towards lower anthropogenic emissions of greenhouse gases and believes it has a role to
play in understanding and investing through the energy transition. Ruffer signed the NZAM in
2022 and published transition-related targets in March 2023. The initiative is supported by an
international group of asset managers with the core goal to reduce emissions in the real economy.
Targets selected under NZAM provide a framework for considering transition risks and
opportunities. When setting NZAM targets, the focus was on ensuring support for real world
emissions reduction and the ability to capture underappreciated transition opportunities.
The three key targets are –
1 80% of assets in scope (defined as listed equities and corporate debt) considered Net Zero,
aligned, or aligning by 2030.
2 By 2025, at least 70% of financed emissions in material sectors will be either Net Zero, aligned
with Net Zero, or the subject of engagement and stewardship actions. This threshold will
increase to at least 90% by 2030 at the latest.
3 A 50% reduction in emissions intensity (tCO2e/$m revenue), adjusting the baseline to reflect
shifts in asset allocation.
The prioritisation of the alignment target keeps focus on whether the companies held are
themselves aligning with Net Zero emissions, rather than a simple focus on reducing emissions of
the portfolio (which may change with asset allocation).
38
Equity security examples
Ryanair
Ruffer has recently increased engagement efforts in the aviation industry. It’s no secret that plane
travel is a high carbon emitting sector – in 2021, it was responsible for over 2% of global
energy-related carbon dioxide emissions. Since the pandemic brought air traffic to a standstill,
passenger travel has recovered to nearly two thirds of its previous level and air cargo has surpassed
its pre-covid peak. The industry is poised to keep emitting significant levels of greenhouse gases
unless structural progress can be made. Abatement technologies are in their infancy and, whilst
they should address the issues aviation companies face, so-called green premiums and low
volumes make these solutions expensive. However, demand is growing. Airlines and logistics
companies are upgrading their fleets to boost fuel efficiency and are signing deals with producers
of sustainable aviation fuel as they focus on their 2030 emissions targets. Whilst this is all at very
small scale relative to the demands of Net Zero, momentum is building.
Ryanair holds a market leading position in European short-haul travel. Ruffer considers the
company well placed to use its brand, convenience and influence – not to mention its financial
flexibility – to deliver on the aviation industry’s transition objectives. Ruffer intends to build a
relationship with the company (and the wider industry) to gain a better understanding of the
challenges it faces in its pursuit of Net Zero. Engagement began by meeting with Ryanair’s director
of sustainability and finance and participating in the company’s Sustainability Day, which focused
on the industry’s pathway to Net Zero.
Meta
Meta Platforms (formerly Facebook) has evolved from one initial social media platform to
encompassing a collection of brands, such as Instagram and Threads, shaping the landscape of
technology innovation. Effective engagement is challenging given the dual class share structure of
the company, where Class B shareholders are entitled to 10 votes per share, compared to the one
vote per share conferred to Class A shareholders. However, there were numerous shareholder
proposals put forward at Meta Platforms’ 2022 AGM and Ruffer actively voted on resolutions that
it believed would result in the best outcome for the company through signalling to the Board that
shareholders have appetite for change, even if the resolutions had little chance of passing.
Ruffer voted against the remuneration resolution because the company’s awards remain
discretionary and the incentive programs lack objective performance metrics and quantified goals.
Ruffer felt disclosure around individual performance assessments was not comprehensive and the
39
Ruffer Investment Company Limited
design allowed for the assessment to have a potentially large impact on final payout. Executives
continue to receive very large equity awards that lack performance vesting criteria and senior
executives’ security costs were exceedingly large. While security costs may be a necessary expense,
the company did not provide a compelling rationale as to why the CEO’s security costs dwarf those
of his peers.
Ruffer voted in favour of a proposal to report on the risks associated with the use of concealment
clauses in employment or post-employment agreements. Ruffer also supported three other
shareholder proposals: a request for a report on charitable contributions, a request for an impact
assessment on third party human rights, more specifically related to Meta’s use of targeted
advertising, and a request for a report on what measures are in place to prevent child sexual
exploitation online. Given the potential financial and reputational impacts of controversies related
to child exploitation on the company’s platforms, we believe shareholders would benefit from
additional information on how the company is managing these risks, including risks associated
with end-to-end encryption technologies.
BP
Leading up to the 2023 Annual General Meeting, there was significant controversy and apparent
discontent over the perception that BP had rowed back on its aims to be a Net Zero company by
2050. Ruffer took a different view based on company disclosure, engagement with the company,
in-house research and Ruffer’s initial investment thesis. BP has been vocal about the energy
‘trilemma’: the need for energy which is secure, affordable and lower carbon. Since BP launched its
transition strategy and Net Zero ambition in 2020, the world has changed, with the invasion of
Ukraine, the recovery from covid-19 and recent inflationary forces. The strategy of any company
should evolve over time with the changing external environment, in order to create shareholder
value and deliver the company’s purpose. BP is no different.
Whilst BP has changed its intermediate targets within the five aims underlying its Net Zero
strategy, what has not changed is its Net Zero ambition covering scope 1, 2 and 3 emissions (both
Net Zero production and sales) by 2050 or sooner. BP also announced additional capital allocation
to its transition growth engines business unit which invests in anything from wind farms to electric
vehicle charging networks, seeking to replace the cash flows which may be lost from the traditional
oil and gas business as the world transitions to a lower carbon economy.
Decarbonising BP’s products and wider society is a key issue but it is not the only problem the
company must address. With its global footprint and experience across energy markets, BP is
somewhat in the crosshairs of governments, shareholders and non-government organisations
40
(NGOs). Governments seek affordable, reliable and adequate supplies of energy. Shareholders
expect this energy to be provided as safely, cost efficiently and profitably as possible. Civil society
and non-governmental organisations want a faster transition or a complete phase out of fossil-fuel
based energy (with no investing or re-investing in oil and gas reserves) in the near term.
Over the year, Ruffer engaged with BP on various occasions, holding discussions with the investor
relations team, the Chief Financial Officer and the head of gas and low carbon energy (who was
appointed in 2022 and has a background in renewable energies). Ruffer also participated in a
CA100+ collaborative engagement meeting with the Chief Executive and the head of strategy,
sustainability and ventures. Topics addressed included safety, the energy transition, capital
allocation, financial performance and BP’s investment in Archaea Energy, one of the largest
renewable natural gas (RNG) producers in the US.
Consequently, Ruffer voted in favour of BP’s climate transition plan, having assessed the
company’s strategy and the management and board’s commitment to Net Zero.
Ruffer also voted against a shareholder resolution seeking the company to limit its scope 3
emissions, consistent with the goals of the Paris Agreement, given our approval of BP’s climate
strategy and the linking of climate progress to executive remuneration.
41
Ruffer Investment Company Limited
Holding at % of total
Investments Currency 30 June 23 Fair value £ net assets
Ruffer Illiquid Multi Strategies Fund 2015* GBP 110,392,473 88,621,863 8.12
Ruffer Protection Strategies International* GBP 9,334,953 73,388,323 6.72
Wisdomtree Brent crude oil USD 1,812,000 61,935,795 5.67
US Treasury floating rate bond 31/01/2024 USD 69,923,800 55,037,952 5.05
US Treasury floating rate bond 31/10/2024 USD 69,862,000 55,027,255 5.05
US Treasury inflation indexed bond 0.625% 15/01/2026 USD 45,000,000 43,061,439 3.94
US Treasury inflation indexed bond 0.625% 15/02/2052 USD 69,810,000 39,501,057 3.62
UK index-linked gilt 0.125% 22/03/2073 GBP 37,500,000 38,225,049 3.50
Japan 0.005% 01/08/2024 JPY 6,391,900,000 34,939,991 3.20
Japan 0.005% 01/07/2024 JPY 6,380,300,000 34,871,706 3.19
* Ruffer Illiquid Multi Strategies Fund 2015 Ltd and Ruffer Protection Strategies International are classed as related parties as they share the same Investment
Manager (Ruffer AIFM Limited) as the Company. LF Ruffer Gold Fund and Ruffer SICAV UK Mid & Smaller Companies Fund are also classed as related parties as
their investment manager (Ruffer LLP) is the parent of the Company’s Investment Manager.
Top ten holdings
42
At the date of this report, the Company has five non-executive Directors, all of whom are
independent.
Christopher Russell, a resident of Guernsey, is a non-executive director of one other listed
company, JPMorgan Global Core Real Assets Ltd, which invests in private JPMorgan managed real
estate and infrastructure funds globally. His only other commitments are as director of a Guernsey
family office, a Guernsey charitable institution and personal family investment interests. Prior to a
non-executive career, Chris was a director of Gartmore Investment Management plc, where he was
Head of Gartmore’s businesses in the US and Japan. Before that he was a holding board director of
the Jardine Fleming Group in Asia, resident in Japan then Hong Kong. Prior to joining Flemings in
London, he was with Phillips & Drew Asset Management. He is a Fellow of the UK Society of
Investment Professionals and a Fellow of the Institute of Chartered Accountants in England and
Wales. He was commissioned by John Wiley to publish in 2006 ‘Trustee Investment Strategy for
Endowments and Foundations’. Mr. Russell was appointed to the Board on 1 December 2016 and
became Chairman of the Board on 4 December 2020.
Shelagh Mason, a resident of Guernsey, is a solicitor specialising in English commercial property.
She retired as a consultant with Collas Crill LLP in October 2020. She is also non-executive
Chairman of the Channel Islands Property Fund Limited, sits on the Board of Riverside Capital
PCC and Skipton International Limited, a Guernsey Licensed bank, and until 28 February 2022
was a non-executive director of The Renewables Infrastructure Group Limited, a FTSE 250
company, when she retired after 9 years on the board. Shelagh also sits on the board of Starwood
European Real Estate Finance Limited, a London-listed company. Previously Shelagh was a
member of the board of directors of Standard Life Investments Property Income Trust Limited, a
property fund listed on the London Stock Exchange, for 10 years until December 2014. She retired
from the board of MedicX Fund Limited, a main market listed investment company investing in
primary healthcare facilities in 2017 after 10 years on the board. She is a past Chairman of the
Guernsey Branch of the Institute of Directors, a member of the Chamber of Commerce and the
Guernsey International Legal Association, and she also holds the IOD Company Direction
Certificate and Diploma with distinction. Mrs Mason was appointed to the Board on 1 June 2020.
Nicholas Pink, a resident of the United Kingdom, has extensive senior management experience in
financial services with previous roles at UBS Investment Bank, including Global Head of Research,
Head of European Research, Head of Asia Research and Head of European Equities. Prior to this
he was Head of European Utilities Research at UBS Investment Bank. He is a non-executive
director of JPMorgan Emerging Europe, Middle East and Africa Securities plc and of Baillie
Directors
43
Ruffer Investment Company Limited
Gifford China Growth Trust plc, both UK-listed investment trusts. Mr Pink was appointed to the
Board on 1 September 2020.
Susie Farnon, a resident of Guernsey, is a Fellow of the Institute of Chartered Accountants in
England and Wales and a non-executive director of a number of property and investment
companies (as further detailed below). Susie was a Banking and Finance Partner with KPMG
Channel Islands from 1990 until 2001 and Head of Audit KPMG Channel Islands from 1999. She
has served as President of the Guernsey Society of Chartered and Certified Accountants and as a
member of the States of Guernsey Audit Commission and Vice-Chairman of the Guernsey
Financial Services Commission. Susie was appointed as a non-executive director of the Association
of Investment Companies, the UK Investment Companies’ trade body, on 1 April 2018. She
currently serves as non-executive director of the following companies listed on recognised stock
exchanges: Apax Global Alpha Limited, Real Estate Credit Investments Limited and Bailiwick
Investments Limited. Susie was appointed to the Board on 1 September 2022.
Solomon Soquar, a resident of the United Kingdom, has a portfolio of roles, including:
non-executive director of Blackrock Sustainable American Income Trust plc and Africa Research
Excellence Fund, and Business Fellow of Oxford University and Smith School of Economics and
Enterprise. Solomon has a long and deep experience of over 30 years across Investment Banking,
Capital Markets and Wealth Management. He has worked with a number of major financial
institutions, including Goldman Sachs, Bankers Trust, Merrill Lynch, Citi and Barclays. His most
recent executive role has been as CEO of Barclays Investments Solutions Limited. Solomon holds
BA/MA in Politics, Philosophy and Economics and M.Phil in Economics from Balliol College,
Oxford. Solomon was appointed to the Board on 2 December 2022.
44
The Directors of the Company present the audited Financial Statements and their report for the
year ended 30 June 2023 which have been prepared in accordance with the Companies (Guernsey)
Law, 2008 (‘company law’).
Registration
The Company was incorporated with limited liability in Guernsey on 1 June 2004 as a company
limited by shares and as an authorised closed-ended investment company. As an existing
closed-ended fund the Company is deemed to be granted an authorised declaration in accordance
with section 8 of the Protection of Investors (Bailiwick of Guernsey) Law, 2020, as amended and
rule 6.02 of the Authorised Closed-ended Investment Schemes Rules and Guidance 2021.
Principal activity and investment objective
The Company is a Guernsey authorised closed-ended investment company with a premium listing
on the London Stock Exchange (LSE). The principal objective of the Company is detailed in the
strategic report on page 11 of the Financial Statements.
Share issuance
During the year, 60,515,000 new redeemable participating preference shares were allotted or
issued under the block listing facility (30 June 2022: 104,497,127 redeemable participating
preference shares issued). Details of the block listing facility are set out in note 13 on pages 103
to106.
Purchase of own shares by the Company
The Company may purchase, subject to various terms as set out in its Articles and in accordance
with the Companies (Guernsey) Law, 2008, up to 14.99%. of the Company’s shares in issue
following the admission of shares trading on the LSE’s market for listed securities. For additional
information refer to note 20 on pages 122 to 124.
The Company did not buy back any shares during the year (30 June 2022: Nil). Subsequent to the
year end, 150,000 shares have been bought into treasury.
The Board also has the discretion to operate the Redemption Facility, offering shareholders the
possibility of redeeming all or part of their shareholding for cash at NAV, if it appears appropriate
to do so.
Results and dividends
The results for the year are set out in the Statement of Comprehensive Income on page 89. Details
of dividends paid and proposed are set out in note 5 on page 99.
45
Report of the Directors
Ruffer Investment Company Limited
Subsequent events
Events occurring after the balance sheet date are disclosed in note 21 on page 124 in the Financial
Statements.
Shareholder information
The Company announces its unaudited NAV on a weekly basis and at the month end. A monthly
report on investment performance is published by the Company’s Investment Manager, on the
Company’s website at ruffer.co.uk/ric
Investment management
The key terms of the Investment Management Agreement and specifically the fee charged by the
Investment Manager are set out in notes 8 and 16 of the Financial Statements.
The Board reviews on an ongoing basis the performance of the Investment Manager and considers
whether the investment strategy utilised is likely to achieve the Company’s investment objective of
realising a positive total annual return, after all expenses, of at least twice the return of the Bank of
England Bank Rate.
In accordance with Listing Rule 15.6.2 (2) R and having formally appraised the performance,
investment strategy and resources of the Investment Manager, the Board has unanimously agreed
that the interests of the shareholders as a whole are best served by the continuing appointment of
the Investment Manager on the terms agreed.
The Investment Management Agreement will continue in force until terminated by the Investment
Manager or the Company giving to the other party thereto not less than 12 months’ notice in
writing.
Directors
The details of the Directors of the Company during the year and at the date of this report are set
out on pages 43 to 44 and in the Management and Administration summary on page 131.
Directors’ interests
The details of the number of redeemable participating preference shares held beneficially by the
Directors who held office at 30 June 2023 and up to the date of this report are set out on in note 16
on page 107.
46
Substantial share interests
As at 31 August 2023*, the Company has received notifications in accordance with the FCA’s
Disclosure and Transparency Rule 5.1.2 R of the following interests in 3% or more of the voting
rights attaching to the Company’s issued shares.
% of issued
Investor Shares held share capital
RBC Brewin Dolphin, stockbrokers 64,216,921 16.74
Hargreaves Lansdown, stockbrokers 32,067,397 8.36
Rathbones 31,387,236 8.18
Interactive Investor 28,752,270 7.50
Charles Stanley 20,618,361 5.38
AJ Bell, stockbrokers 17,177,138 4.48
Evelyn Partners 16,759,198 4.37
Transact 13,608,584 3.55
*Data is taken from the latest available Share Register Analysis produced by Richard Davies Investor Relations Limited.
International tax reporting
For the purposes of the US Foreign Accounts Tax Compliance Act (FATCA), the Company
registered with the US Internal Revenue Service (IRS) as a Guernsey reporting Foreign Financial
Institution (FFI) in June 2014, received a Global Intermediary Identification Number
(99DLPF.99999.SL.831), and can be found on the IRS FFI list.
The Common Reporting Standard (CRS) is a standard developed by the Organisation for Economic
Co-operation and Development (OECD) and is a global approach to the automatic exchange of tax
information, to counter tax evasion and to build upon other information-sharing legislation, such
as FATCA. Guernsey has adopted the CRS, which came into effect on 1 January 2016.
The Board confirms that the Company’s FATCA and CRS submissions for 2022 were submitted by
the deadline of 30 June 2023.
The Company is committed to zero tolerance towards the facilitation of tax evasion.
Alternative Investment Fund Managers Directive
The Company is categorised as a non-EU Alternative Investment Fund (AIF). The AIFMD seeks to
regulate managers of AIFs, such as the Company. It imposes obligations on AIFMs who manage
AIFs in a member state of the European Economic Area (EEA state), or who market shares in AIFs
to investors who are domiciled, or with a registered office, in an EEA state. Under the AIFMD, an
47
Ruffer Investment Company Limited
AIFM must be appointed and must comply with various organisational, operational and
transparency requirements.
The Company has appointed the Investment Manager to act as AIFM on behalf of the Company.
The Investment Manager is responsible for fulfilling the role of the AIFM and ensuring the
Company complies with the AIFMD requirements. The AIFM has no direct employees as it
delegates its duties to Ruffer LLP. Ruffer LLP’s employee remuneration disclosure requirements
under the AIFMD are included in its Pillar III remuneration disclosure statement.
Non-mainstream pooled investments
The Company intends to be operated in such a manner that its shares are not categorised as
non-mainstream pooled investments. Among other things, this requires the Company to pay
dividends such that it retains no more than 15% of the income that it receives or is deemed to
receive for UK tax purposes on an annual basis so that it would qualify as an investment trust if it
were UK tax-resident.
Disclosure of information to the Independent Auditor (‘the Auditor’)
Each of the persons who is a Director at the date of approval of the Financial Statements confirms
that –
1 so far as each Director is aware, there is no relevant audit information of which the Company’s
Auditor is unaware and
2 each Director has taken all steps he ought to have taken as a Director to make himself aware of
any relevant audit information and to establish that the Company’s Auditor is aware of that
information.
This confirmation is given and should be interpreted in accordance with the provisions of
Section 249 of the Companies (Guernsey) Law, 2008.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and Financial Statements in
accordance with applicable Guernsey law and regulations.
Guernsey company law requires the Directors to prepare Financial Statements for each financial
year. Under that law they have elected to prepare the Financial Statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union and
applicable law.
48
Under company law, the Directors must not approve the Financial Statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or
loss of the Company for that period.
In preparing the Financial Statements, International Accounting Standard 1 requires that
directors –
– select suitable accounting policies and apply them consistently
– make judgements and estimates that are reasonable, relevant and reliable
– state whether applicable accounting standards have been followed, subject to any material
departures disclosed and explained in the Financial Statements
– assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and
– use the going concern basis of accounting, unless they either intend to liquidate the Company
or cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping proper accounting records that are sufficient to show
and explain the Company’s transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that the Financial Statements comply
with company law. They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the oversight of the maintenance and integrity of the corporate
and financial information included on the Company’s website at ruffer.co.uk/ric. Legislation in
Guernsey governing the preparation and dissemination of Financial Statements may differ from
legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge –
1 the Financial Statements have been prepared in conformity with IFRS as adopted by the
European Union, give a true and fair view of the assets, liabilities, financial position and profit
or loss of the Company as required by DTR 4.1.12
2 the Annual Financial Report, taken as a whole, is fair, balanced and understandable and
provide the information necessary for the shareholders to assess the Company’s performance,
business model and strategy and
3 the Annual Financial Report including information detailed in the Chairman’s review, the
Report of the Directors, the Investment Manager’s report, the Report of the Depositary and the
49
Ruffer Investment Company Limited
notes to the Financial Statements, includes a fair review of the development and performance
of the business and the position of the Company together with a description of the principal
risks and uncertainties that it faces, as required by –
a DTR 4.1.8 and DTR 4.1.9 of the Disclosure and Transparency Rules, being a fair review of
the Company business and a description of the principal risks and uncertainties facing the
Company and
b DTR 4.1.11 of the Disclosure and Transparency Rules, being an indication of important
events that have occurred since the end of the financial year and the likely future
development of the Company.
On behalf of the Board
Susie Farnon
Director
3 October 2023
50
Corporate governance
On 1 January 2016, the Company became a member of the Association of Investment Companies
(AIC) and complies with the 2019 AIC Code of Corporate Governance issued in February 2019 (‘the
AIC Code’), effective for accounting periods commencing on or after 1 January 2019. By complying
with the AIC Code, the Company is deemed to comply with both the UK Corporate Governance
Code 2018 (‘the UK Code’) and the Guernsey Financial Services Commission (GFSC) Finance
Sector Code of Corporate Governance (as amended in June 2021) (‘the GFSC Code’).
To ensure ongoing compliance with these principles the Board receives a report from the Company
Secretary on an annual basis identifying how the Company is in compliance and identifying any
areas of non-compliance. The Company has complied with the provisions of the UK Code
throughout the year, with the following exceptions –
– the Company has no chief executive, as required by principle G and provision 9 of the UK
Code. See the Composition and independence of the Board section on pages 55 to 57 below
– the Company has no internal audit function, as envisaged by principle M and provision 25 of
the UK Code. See the Internal control section on pages 62 to 63 below
– the Company does not have a remuneration committee, as required by principle Q and
provision 32 of the UK Code. See the Remuneration Committee section on page 62 below.
The AIC Code is available on the AIC’s website, theaic.co.uk
The Board, having reviewed the AIC Code, considers that it has maintained procedures during the
year ended 30 June 2023 and up to the date of this report to ensure that it complies with the AIC
Code except as detailed above.
Purpose of the Company
The purpose of the Company is to provide its shareholders with access to a portfolio of equity,
equity-related and debt investments that will produce a positive return of at least twice the Bank of
England bank rate. For further details, see the strategic report section on page 11.
Role of the Board
The Board is the Company’s governing body and has overall responsibility for ensuring the
Company’s success by directing and supervising the affairs of the business and meeting the
appropriate interests of shareholders and relevant stakeholders, while enhancing the value of the
Corporate governance statement
51
Ruffer Investment Company Limited
Company and also ensuring protection of investors. A summary of the Board’s responsibilities is as
follows –
– statutory obligations and public disclosure
– strategic matters and financial reporting
– capital management, including gearing and dividend policy
– review of investment performance and associated matters
– risk assessment and management including reporting compliance, governance, monitoring and
control and
– other matters having a material effect on the Company.
The Board’s responsibilities for the Annual Report are set out in the Statement of Directors’
Responsibilities on pages 49 to 50.
The Board has contractually delegated responsibility for the management of its investment
portfolio, the arrangement of custodial and depositary services and the provision of accounting
and company secretarial services. The Board has adopted a schedule of matters specifically
reserved for its decision-making and distinguishing these from matters it has delegated to the
Company’s key service providers. This schedule is available on the Company’s website at
ruffer.co.uk/ric
The Board needs to ensure that the Financial Statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to assess the Company’s
performance, business model and strategy.
In seeking to achieve this, the Directors have set out the Company’s investment objective and
strategy (see pages 11 to 12) and have explained how the Board and its delegated Committees
operate and how the Directors review the risk environment within which the Company operates
and set appropriate risk controls. Furthermore, throughout the Financial Statements the Board
has sought to provide further information to give shareholders a fair, balanced and understandable
view.
Relations with shareholders
The Board welcomes shareholders’ views and places great importance on communication with its
shareholders. The Board receives regular reports on the views of its shareholders from the
Company’s Broker and Investment Manager which are taken into consideration as part of the
Board’s decision-making process.
52
The Chairman and other Directors are available to meet shareholders if required and the AGM of
the Company provides a forum for shareholders to meet and discuss issues with the Directors of
the Company.
The Chairman and Directors offer to meet with shareholders at regular investor presentations
co-ordinated by the Investment Manager to discuss key strategic matters and any issues raised by
shareholders. The next such event will take place at the office of the Investment Manager on
5December 2023.
In addition, the Investment Manager maintains a website which contains comprehensive
information, including financial reports, prospectus and monthly reports on investment
performance which contains share price information, investment objectives, investment reports
and investor contacts.
Stakeholders and Section 172
Whilst directly applicable to companies incorporated in the UK, the Board recognises the intention
of the AIC Code that matters set out in section 172 of the Companies Act, 2006 are reported. The
Board strives to understand the views of the Company’s key stakeholders and to take these into
consideration as part of its discussions and decision-making process. As an investment company
the Company does not have any employees and conducts its core activities through third party
service providers. Each service provider has an established track record and is required to have in
place suitable policies and procedures to ensure it maintains high standards of business conduct,
treats customers fairly, and employs corporate governance best practice.
The Board’s commitment to maintaining high-standards of corporate governance, combined with
the Directors’ duties incorporated in the Companies (Guernsey) Law, 2008, the Company’s
constitutive documents, the Disclosure Guidance and Transparency Rules and the Market Abuse
Regulation, ensure that shareholders are provided with frequent and comprehensive information
concerning the Company and its activities.
Whilst the primary duty of the Directors is owed to the Company as a whole, all Board discussions
involve careful consideration of the longer-term consequences of any decision and their
implications for stakeholders. Particular consideration is given to the continued alignment
between the activities of the Company and those that contribute to delivering the Board’s strategy,
which include the Company’s Investment Manager, the AIFM, the Administrator, the Broker and
the Custodian.
53
Ruffer Investment Company Limited
Through the Board’s ongoing programme of shareholder engagement (see ‘Relations with
shareholders’ above) and the reports produced by each key service provider at quarterly Board
meetings, the Directors are satisfied that sufficient information is provided so as to ensure the
matters set out in section 172 of the Companies Act are taken into consideration as part of the
Board’s decision-making process.
The Board respects and welcomes the views of all stakeholders. Any queries or areas of concern
regarding the Company’s operations can be raised with the Company Secretary.
Section 172 statement
Although the Company is not domiciled in the UK, through adopting and reporting against the best
practice principles set out in the AIC Code, the Company is voluntarily meeting any obligations
under the UK Corporate Governance Code, including section 172 of the Companies Act 2006.
The Board of Directors recognise their individual and collective duty to act in good faith and in a
way that is most likely to promote the success of the Company for the benefit of its members as a
whole, whilst also having regard, amongst other matters, to the Company’s key stakeholders and
the likely consequences of any decisions taken during the year, as set out below.
The interests of the Company’s employees
The Company has no direct employees and maintains close working relationships with the
employees of the Investment Manager and the Administrator, who undertake the Company’s main
functions. Refer to the report of the Management Engagement Committee on pages 73 to 74.
The impact of the Company’s operations on the community and the environment
Whilst the Company has a limited impact on the community and environment in respect of its day
to day activities, the Board notes that the Investment Manager recognises that environmental
responsibility is core to its longer term business success, and actively integrates environmental,
social and corporate governance (ESG) issues into its investment process. The Investment
Manager’s Stewardship and Responsible Investment Policy is available upon request. For more
detail, please see the Responsible investment report on pages 36 to 41.
The need to foster the Company’s business relationships with suppliers and others
The Board maintains close working relationships with all key suppliers and those responsible for
delivering the Company’s strategy. The contractual relationship with each supplier and their
performance is formally reviewed each year. Refer to the report of the Management Engagement
Committee on pages 73 to 74.
54
The desirability of the Company maintaining a reputation for high standards of business conduct
The Chair is responsible for setting expectations concerning the Company’s culture and the Board
ensures that its core values of integrity and accountability are demonstrated in all areas of the
Company’s operation.
The need to act fairly between Shareholders of the Company
The Board, in conjunction with the Investment Manager and Broker, engages actively with
Shareholders to understand their views and to ensure their interests are taken into consideration
when determining the Company’s strategic direction. Refer to the section on ‘Relations with
shareholders’ above.
In December 2022, the Company issued a new prospectus to allow it to continue with its tap
issuances by resetting its 20% capacity under the Prospectus Regulation. During the year, the
Company issued a total of 60,515,000 shares. This significant growth has been to the advantage of
all shareholders leading to the broadening of the shareholder base, accretion to NAV and an
improvement in the liquidity of the Company’s shares. The reasons for seeking shareholder
authority to issue shares were stated in the Circulars and are detailed by the Chairman in the Share
issuance section of his statement.
Composition and independence of the Board
The Board currently comprises five non-executive Directors, all of whom are considered to be
independent, which the Board considers to be its optimal size for the time being. The Board
considers that it has a good balance of skills and experience to ensure it operates effectively. The
Directors of the Company are listed on pages 43 to 44 and in the Management and Administration
summary on page 131.
The Company has no employees and therefore there is no requirement for a chief executive. None
of the Directors has a contract of service with the Company.
The current Chairman of the Board is Mr Christopher Russell. Mr Russell was appointed as
Chairman of the Board on 4 December 2020.
The Chairman of the Board must be independent for the purposes of Chapter 15 of the Listing
Rules. Mr Russell is considered independent because he –
– has no current or historical employment with the Investment Manager
– has not provided any professional advisory services to the Investment Manager and
55
Ruffer Investment Company Limited
– has no current directorships in any other investment funds managed by the Investment
Manager.
As Chairman, Mr Russell is responsible for leading the Board of Directors and for ensuring its
effectiveness in all aspects of its role. The key responsibilities of the Chairman are as follows –
– meeting with major shareholders to obtain a balanced understanding of any issues, concerns,
and providing feedback to the Board
– demonstrating ethical leadership and promoting the highest standards of integrity, probity and
corporate governance throughout the Company
– setting the Board’s agenda and ensuring the Board has in place effective decision-making
processes which are supported by accurate and high-quality information and
– leading the annual performance evaluation of the Board and taking all appropriate actions
based on the results of the evaluation.
In accordance with the AIC Code and in recognition of the Board’s desire to maintain high
standards of corporate governance, the Board appointed Mr Nicholas Pink to succeed Mrs Jill May
as the Company’s Senior Independent Director (SID) with effect from Mrs May’s retirement on
2December 2022.
The key roles and responsibilities of the SID are as follows –
– providing support to the Chairman in relation to matters of Board effectiveness and
governance
– being available to shareholders and the other Directors as an additional point of contact or to
communicate any concerns to the Board
– leading the annual performance evaluation of the Chairman of the Board and succession
planning for the Chairman’s role and
– attending meetings with major shareholders alongside the Chairman, as required.
The Board has engaged external companies to undertake the investment management,
administrative and custodial activities of the Company. Documented contractual arrangements are
in place with these companies which define the areas where the Board has delegated responsibility
to them. For additional information refer to page 52.
The Company holds a minimum of four Board meetings per year to discuss strategy, general
management, structure, finance, dividend payments, capital management, corporate governance,
ESG matters, marketing, risk management, compliance and gearing, contracts and performance.
56
In addition an annual strategy meeting is held by the Board with the Investment Manager. The
quarterly Board meetings are the principal source of regular information for the Board, enabling it
to determine policy and to monitor performance, compliance and controls but these meetings are
supplemented by communication and discussions throughout the year.
Representatives of the Investment Manager, Administrator and Company Secretary attend each
Board meeting either in person or by videoconference, thus enabling the Board to fully discuss and
review the Company’s operations and performance. In addition, representatives from the
Company’s Broker attend at least two Board meetings a year. Each Director has direct access to the
Investment Manager and Company Secretary and may at the expense of the Company seek
independent professional advice on any matter.
Attendance at the Board and other meetings during the year was as follows –
Audit & Risk Management
Board Committee Engagement Committee
——————————————— ——————————————— ———————————————
Meetings Scheduled Attended Scheduled Attended Scheduled Attended
——–––––—————————————————————————————— ——————————————— ——————————————— ———————————————
Christopher Russell 4 4 4 4 1 1
Nicholas Pink 4 4 4 4 1 1
Susie Farnon (appointed 1 Sep 2022) 4 4 4 4 1 1
Shelagh Mason 4 4 4 4 1 1
Solomon Soquar (appointed 2 Dec 2022) 3 3 3 3 1 1
Jill May (retired 2 Dec 2022) 2 2 2 2 – –
David Staples (retired 2 Dec 2022) 2 2 2 2 – –
In addition to the above meetings, a number of ad-hoc meetings of an administrative nature were
held during the year.
Conflicts of interest
Directors are required to disclose all actual and potential conflicts of interest as they arise for
approval by the Board, who may impose restrictions or refuse to authorise conflicts. The process of
consideration and, if appropriate, approval will be conducted only by those Directors with no
material interest in the matter being considered. The Board maintains a Conflicts of Interest policy
which is reviewed periodically and a Business Interests and Potential Conflicts of Interest Register
which is reviewed by the Board at each quarterly Board meeting.
57
Ruffer Investment Company Limited
Directors’ indemnity
Directors’ and Officers’ liability insurance cover is maintained by the Company on behalf of the
Directors.
Re-election
The Company’s Articles prescribe that, at each AGM, one-third of the Directors shall retire from
office and may offer themselves for re-election. However, in line with best practice, the Board has
determined that all of the Directors should stand for re-election at each AGM.
Accordingly, on 2 December 2022 at the 17th AGM of the Company, Nicholas Pink, Shelagh
Mason, Jill May, Christopher Russell and David Staples retired as Directors of the Company and,
being eligible, Nicholas Pink, Shelagh Mason and Christopher Russell offered themselves for
re-election, and were re-elected as Directors of the Company by the Shareholders. At the same
meeting, Susie Farnon and Solomon Soquar were proposed for election, and were elected as
Directors of the Company by the Shareholders.
On 2 December 2022, David Staples and Jill May retired from the Board, and we thank them for
their valuable service to the Company. Further details regarding the experience of each of the
Directors are set out on pages 43 to 44.
The Directors may at any time appoint any person to be a Director either to fill a vacancy or as an
addition to the existing Directors. Any Director so appointed shall hold office only until, and shall
be eligible for election at, the next general meeting following their appointment but shall not be
taken into account in determining the Directors or the number of Directors who are to retire by
rotation at that meeting if it is an AGM.
Board evaluation
Subsequent to the year end, the Board engaged Lintstock, a firm highly experienced in conducting
board evaluations, to facilitate an external evaluation of the Board, following on from their
previous review during the prior year. The Board evaluation considers a broad range of areas
including; Board composition and expertise, Board dynamics, the structure of the Board and its
Committees, Board oversight of investment strategy and performance, relations with shareholders,
oversight of risk management, succession planning, in particular in relation to the Chairman, and
priorities for change during the forthcoming financial year.
During the financial years where an external evaluation is not conducted, the Board conducts an
annual self-evaluation of its performance and that of the Company’s individual Directors, which is
led by the Chairman and, as regards the Chairman’s performance evaluation, by the Senior
58
Independent Director. The annual self-evaluation considers how the Board functions as a whole,
taking into account the balance of skills, experience and length of service of each Director, and also
reviews the individual performance of its members.
To facilitate the self-evaluation, the Company Secretary circulates a detailed questionnaire to each
Director and a separate questionnaire for the evaluation of the Chairman. The questionnaires, once
completed, are returned to the Company Secretary who collates responses, prepares a summary
and discusses the Board evaluation with the Chairman prior to circulation to the remaining Board
members. The performance of the Chairman is evaluated by the other Directors, led by the Senior
Independent Director.
The Board considers the annual self-evaluation process to be appropriate having regard to the non-
executive role of the Directors and the significant outsourcing of services by the Company to
external providers.
Board succession planning
The Board considers it has a breadth of experience relevant to the Company, and the Directors
believe that any changes to the Board’s composition can be managed without undue disruption. An
induction programme is in place for all Director appointees. Any proposals for a new Director are
discussed and approved by the Board.
The Board’s succession planning policy seeks to ensure that the Board remains well balanced and
that the Directors have a sufficient level of skills, knowledge and experience to meet the needs of
the Company. The Directors are ever-cognisant of the need for the Board to have a balance of
gender and other attributes, including the requirement to appoint a majority of non-UK resident
Directors.
The Board’s policy is that a Director of the Company, who subsequently becomes Chair, should
serve for no more than a total of 12 years. The current Chairman, Christopher Russell, has
indicated his intention to step down from the Board no later than the AGM in December 2024.
Board diversity
The Board supports the recommendations of the Davies Report and notes the recommendations of
the Parker review into ethnic diversity and the Hampton-Alexander review on gender balance in
FTSE leadership. The Board supports the widening of its diversity, whilst ensuring the capabilities,
experience and background of each member remain appropriate to the Company and continue to
contribute to overall Board effectiveness.
59
Ruffer Investment Company Limited
The Board is currently 40% female, having stood at 50% prior to the retirement of Jill May on
2December 2022.
In compliance with FCA Listing Rule 9.8.6 (LR 9.8.6), the Company has provided information, set
out in the tables below, on how it has met the following targets on Board diversity –
– at least 40% of the Board is female
– at least one senior position on the Board is held by a woman and
– at least one individual on the Board is from a minority ethnic background.
The Board confirms that all of the targets have been met as at 30 June 2023, the Company’s
chosen reference date within its financial year for the data.
Number of
Number of senior positions
Gender identity Board members % of the Board on the Board
Men 3 60 2
Women 2 40 2
Number of
Number of senior positions
Ethnic background Board members % of the Board on the Board
White British or other White
(including minority white groups) 4 80 4
Black/African/Caribbean/Black British 1 20 –
Other ethnic group – – –
The data shown in the above tables reflect the gender and ethnic background of the Board, and
were collected on the basis of self-reporting by the individuals concerned. The questions asked
were ‘Which ethnicity category best describes your background?’ and ‘What is the gender in which
you wish to be categorised?’.
The Listing Rules specify the positions of CEO, CFO, Chair and SID as being senior positions. The
Board notes that, as an externally-managed investment company, with a Board comprised entirely
of non-executive Directors, it does not have the roles of a chief executive officer or chief finance
officer as envisaged in LR 9.8.6, and therefore for the purpose of the above targets, it considers the
senior positions on the Board to include the roles of Chair, SID and Chair of any permanent
committee of the Board.
60
There have been no changes to the composition of the Board subsequent to the year end.
Committees of the Board
The Board has established an Audit and Risk Committee and a Management Engagement
Committee and approved their terms of reference, copies of which can be obtained from the
Company Secretary upon request and on the Company’s website at ruffer.co.uk/ric
The table on page 57 sets out the number of Committee meetings held during the year ended
30June 2023 and the number of such meetings attended by each Committee member.
Audit and Risk Committee
The Company has established an Audit and Risk Committee (ARC), with formally delegated duties
and responsibilities within written terms of reference. The ARC is comprised of the entire Board
and is chaired by Susie Farnon, who succeeded David Staples upon his retirement from the Board
on 2 December 2022. The ARC meets formally at least three times a year.
A report of the ARC detailing responsibilities and activities is presented on pages 68 to 72.
Management Engagement Committee
The Company has established a Management Engagement Committee (MEC), with formally
delegated duties and responsibilities within written terms of reference. The MEC is comprised of
the entire Board and is chaired by Shelagh Mason, who took over from Jill May upon her
retirement from the Board on 2 December 2022. The MEC meets annually in June each year and
holds ad hoc meetings to address any arising issues as required.
The principal duties of the Committee are to review the performance of and contractual
arrangements with the Investment Manager and all other service providers to the Company (other
than the Auditor).
During the year the Committee has reviewed the services provided by its service providers, and
recommended that the continuing appointments of the Company’s Investment Manager and other
service providers was in the best interests of the Company. The last meeting was held on
15June2023.
A report of the MEC detailing responsibilities and activities during the year is presented on
pages 73 to 74.
61
Ruffer Investment Company Limited
Nomination Committee
The Board does not have a separate Nomination Committee, the functions of which are fulfilled by
the Board. Any proposals for a new Director are discussed and approved by the Board. The Board
will determine whether an external search consultancy or open advertising is used in the
appointments of future non-executive Directors.
Remuneration Committee
In view of its non-executive and independent nature, the Board considers that it is not appropriate
to have a Remuneration Committee as anticipated by the UK Code because this function is carried
out as part of the regular Board business. A Remuneration report prepared by the Board is on
pages 65 to 67.
Internal control
The Company’s risk exposure and the effectiveness of its risk management and internal control
systems are reviewed by the Audit and Risk Committee at its meetings and annually by the Board.
The Board is responsible for establishing and maintaining the Company’s system of internal
controls and for maintaining and reviewing its effectiveness. The system of internal controls is
designed to manage rather than to eliminate the risk of failure to achieve business objectives and
as such can only provide reasonable, but not absolute, assurance against material misstatement or
loss. These controls aim to ensure that assets of the Company are safeguarded, proper accounting
records are maintained and the financial information for publication is reliable. The Board uses a
formal risk assessment matrix to identify and monitor business risks.
The Board has contractually delegated to external parties various functions as listed below. The
duties of investment management, administration and custody are segregated. Each of the
contracts entered into with the parties was entered into after full and proper consideration by the
Board of the quality and cost of services offered, including the control systems in operation as far
as they relate to the affairs of the Company.
The Board, together with the Audit and Risk Committee, considers on an ongoing basis the process
for identifying, evaluating and managing any significant risks faced by the Company. The process
includes reviewing reports from the Company Secretary on risk control and compliance, in
conjunction with the Investment Manager’s regular reports which cover investment performance.
Investment and portfolio risk management is provided by Ruffer AIFM Limited, a company
authorised by the FCA.
62
Administration, accounting, registrar, and company secretarial duties are performed by Sanne
Fund Services (Guernsey) Limited (formerly Praxis Fund Services Limited), a company licensed
and regulated by the Guernsey Financial Services Commission.
CREST agency functions are performed by Computershare Investor Services (Jersey) Limited, a
company licensed and regulated by the Jersey Financial Services Commission.
Depositary services performed by Northern Trust (Guernsey) Limited, a company licensed and
regulated by the Guernsey Financial Services Commission.
Custodial services are provided by Northern Trust (Guernsey) Limited, a company licensed and
regulated by the Guernsey Financial Services Commission.
Sponsorship and brokering services are provided by Investec Bank plc (Investec), a firm which is
authorised and regulated by the FCA.
The Board reviews regularly the performance of the service companies. The Auditor is reviewed by
the ARC and the other service providers by the MEC as described in the MEC report on page 73.
The Board meets formally with the Investment Manager quarterly to review the performance of the
investments in the light of the Company’s investment objectives, and the Investment Manager’s
position against its peers. The Board also conducts an annual visit to the offices of Ruffer LLP to
meet with certain of the senior executives in the firm and to review such matters as its internal
control procedures; Ruffer’s business, product, marketing and personnel strategies, so far as they
affect the Company; portfolio risk analysis; integration of ESG into portfolio construction; and
cyber vulnerability. The last such visit took place on 19 September 2023.
The Board receives and reviews quarterly reports from the Investment Manager, the AIFM and the
Administrator. The MEC conducted an annual review of all key service providers in June 2023,
which was communicated to the Board, and included a detailed assessment of their performance
along with completion of a questionnaires by each service provider regarding key areas including
their control environment, business continuity and the impact of covid-19, cyber security
arrangements and response to ESG, as further disclosed in the MEC report on pages 73 to 74.
In common with most investment companies, the Company does not have an internal audit
function. All of the Company’s management functions are delegated to the Investment Manager
and Administrator which have their own internal compliance and risk assessment functions. As
such, an internal audit function specific to the Company is therefore considered unnecessary, as
explained on page 72.
63
Ruffer Investment Company Limited
Principal risks and uncertainties
Principal risks and uncertainties are disclosed on pages 15 to 17.
Anti-bribery and corruption
The Board acknowledges that the Company’s international operations may give rise to possible
claims of bribery and corruption. In consideration of The Bribery Act 2010, enacted in the UK, at
the date of this report the Board had conducted a review of the perceived risks to the Company
arising from bribery and corruption to identify aspects of business which may be improved to
mitigate such risks. The Board has adopted a zero tolerance policy towards bribery and has
reiterated its commitment to carry out business fairly, honestly and openly.
Criminal Finances Act
The Board has a zero tolerance commitment to preventing persons associated with it from
engaging in criminal facilitation of tax evasion and will not work with any service provider who
does not demonstrate the same commitment. The Board has satisfied itself in relation to its key
service providers that they have reasonable provisions in place to prevent the criminal facilitation
of tax evasion by their own staff or any associated persons.
UK Modern Slavery Act
The Board acknowledges the requirement to provide information about human rights in
accordance with the UK Modern Slavery Act. The Board conducts the business of the Company
ethically and with integrity, and has a zero tolerance policy towards modern slavery in all its forms.
As the Company has no employees, all its Directors are non-executive and all its functions are
outsourced, there are no further disclosures to be made in respect of employees and human rights.
64
Introduction
An ordinary resolution for the approval of the annual remuneration report was passed by
shareholders at the AGM held on 2 December 2022.
Remuneration policy
All Directors are non-executive and a Remuneration Committee has not been established. The
Board as a whole considers matters relating to the Directors’ remuneration. No advice or services
were provided by any external person in respect of its consideration of the Directors’
remuneration.
The Company’s policy is that the fees payable to the Directors should reflect the time spent by the
Directors on the Company’s affairs and the responsibilities borne by the Directors and be sufficient
to attract, retain and motivate directors of a quality required to run the Company successfully. The
Chairs of the Board, the Audit and Risk Committee and the Management Engagement Committee
and the SID are paid a higher fee in recognition of their additional responsibilities. The policy is to
review fee rates periodically, although such a review will not necessarily result in any changes to
the rates, and account is taken of fees paid to directors of comparable companies.
There are no long term incentive schemes provided by the Company and no performance fees are
paid to Directors.
No Director has a service contract with the Company but each of the Directors is appointed by a
letter of appointment which sets out the main terms of their appointment. Directors hold office
until they retire or cease to be a director in accordance with the Articles of Incorporation or by
operation of law.
Remuneration
The Directors of the Company are remunerated for their services at such a rate as the Directors
determine provided that the aggregate amount of such fees does not exceed £300,000 (30 June
2022: £300,000) per annum.
Directors’ remuneration report
65
Ruffer Investment Company Limited
Directors are remunerated in the form of fees, payable quarterly in arrears, to the Director
personally. The annual fees payable to each Director as at 30 June 2023 and 30 June 2022 are
shown below –
30 June 23 £ 30 June 22 £
Christopher Russell (Chairman) 58,000 48,800
Nicholas Pink (Senior Independent Director with
effect from 2 December 2022) 41,500 34,500
Susie Farnon (appointed 1 September 2022, Chair of Audit
and Risk Committee with effect from 2 December 2022) 48,000 na
Shelagh Mason (Chair of Management Engagement Committee
with effect from 2 December 2022) 41,500 34,500
Solomon Soquar (appointed 2 December 2022) 39,000 na
Jill May (retired 2 December 2022, Senior Independent Director and
Chair of Management Engagement Committee until 2 December 2022) na 36,850
David Staples (retired 2 December 2022, Chair of Audit and
Risk Committee until 2 December 2022) na 39,700
228,000 194,350
During the year ended 30 June 2023, Directors’ fees of £238,875 (30 June 2022: £185,900) were
charged to the Company of which £nil remained payable at the year end (30 June 2022: £nil).
No additional remuneration has been paid to Directors outside their normal fees and expenses.
In February 2021, the Board reviewed the Directors’ fees against the Trust Associates NED fee
review and noted that the fees paid to the Directors were below the average for all UK investment
companies with market capitalisations over £500 million, and well below the equivalent fees paid
to directors of Channel Island companies. It was noted that during the Board recruitment process
conducted in the previous calendar year, at least one potential candidate had declined to
participate due to the level of directors’ fees being insufficient by market standards.
66
As a result, the Board resolved in June 2022 that the basic fee be increased by 13.0% in nominal
terms, from £34,500 to £39,000 per annum, effective 1 July 2022 (2022: 9.5% in nominal terms
effective 1 January 2022), with a view to further gradual increases towards the industry average.
Additional fees were also increased as follows –
– serving as Chairman: fee increased from £14,300 to £19,000
– serving as Chair of the Audit Committee: fee increased from £5,200 to £9,000
– serving as Senior Independent Director: fee increased from £2,350 to £2,500
– serving as Chair of Management Engagement Committee: fee increased from £2,350 to
£2,500.
An independent adviser will be appointed in due course to provide an updated review of, and
recommendations on, Board remuneration.
67
Ruffer Investment Company Limited
The Audit and Risk Committee presents here its report for the year ended 30 June 2023, setting out
the responsibilities of the Committee and its key activities for the year from 1 July 2022 to 30 June
2023. As in previous years, the Committee has reviewed the Company’s financial reporting, the
independence and effectiveness of the Auditor and the internal control and risk management
systems of service providers. In order to assist the Committee in discharging these responsibilities,
regular reports are received from the Investment Manager, Administrator and Auditor.
Members of the Committee will continue to be available at each AGM to respond to any
shareholder questions on its activities and reports.
Responsibilities
The Committee reviews and recommends to the Board the Financial Statements of the Company
and is the forum through which the Auditor reports to the Board of Directors.
The role of the Committee includes –
– monitoring and reporting to the Board on such matters as the integrity of the Financial
Statements of the Company and any formal announcements relating to the Company’s
financial performance, and any significant financial reporting judgements
– providing advice to the Board on whether the Financial Statements of the Company are fair,
balanced and understandable, and provide the information necessary for shareholders to
assess the Company’s position and performance
– considering the appropriateness of accounting policies and practices including critical
estimates and judgement areas
– reviewing and considering the AIC Code, the UK Code and FRC Guidance on Audit
Committees
– monitoring and reviewing the quality, effectiveness and independence of the Auditor and the
effectiveness of the audit process, considering and making recommendations to the Board on
the appointment, re-appointment, replacement and remuneration of the Company’s Auditor
– developing and implementing policy on the engagement of the Auditor to provide non-audit
services
– reviewing the Company’s procedures for prevention, detection and reporting of fraud, bribery
and corruption
– monitoring and reviewing the internal control and risk management systems of the Company
and its service providers, including review of the risk matrix and identification of principal and
emerging risks
Audit and Risk Committee report
68
– considering the need for an internal audit function and
– reporting to the Board on how it has discharged its responsibilities.
The Committee’s full terms of reference are available on the Company’s website at ruffer.co.uk/ric
Key activities
The following sections discuss the assessments made by the Committee during the year.
Financial reporting – the Committee’s review of the Unaudited Half Yearly Financial Report,
Unaudited Investment Manager’s Year End Review and the Annual Report and Audited Financial
Statements focused on the significant risk relating to the valuation and ownership of investments.
The investments comprise the majority of the Company’s NAV and hence form part of the Key
Performance Indicator (KPI) NAV per share. Hence any significant error in valuation or
misstatement of holdings could materially impact the NAV and hence the reported NAV per share
of the Company.
Valuation of investments – the Company’s investments had a fair value of £1,037,539,714 as at
30 June 2023 (30 June 2022: £852,380,832) and represented the majority of the net assets of the
Company. The investments are predominantly listed except for investments in unlisted investment
funds.
The valuation of investments as at 30 June 2023 is in accordance with the requirements of IFRS.
The Committee considered the fair value of the investments held by the Company as at 30 June
2023 to be reasonable based on information provided by the Investment Manager and
Administrator. All prices are confirmed to independent pricing sources as at 30 June 2023 by the
Administrator and are subject to a review process at the Administrator and oversight at the
Investment Manager. We also note the work of the Auditor on these balances as set out in their
report on pages 77 to 87.
The Committee considered the classification of the Company’s investments within the levels of the
fair value hierarchy in accordance with the requirements of IFRS 9, most notably the classification
of the Company’s holding in the Ruffer Illiquid Multi-Strategies Fund, which represents
approximately 8.1% of the Company’s NAV. The Committee was comfortable that this investment
should be classified within Level 2 of the hierarchy, as the Investment Manager creates a sufficient
market for the shares.
69
Ruffer Investment Company Limited
Ownership of investments – the Company’s investment holdings are reconciled to independent
reports from the Custodian by the Administrator with any discrepancies being fully investigated
and reconciled by the Administrator. The Committee satisfied itself, based on reviews of
information provided by the Custodian, Depositary and Administrator, that the holdings of
investments are correctly recorded.
Investment income and realised and unrealised gains and losses on investments – the Committee
has considered the risk that these items may be materially mis-stated, which could impact the
reporting of the performance of the Company in any accounting period. The Committee is satisfied
that the controls around the recording and calculations for these items and the reconciliation of
cash and investment holdings are sufficiently robust to satisfactorily mitigate this risk.
Risk management – the Committee considered the process for managing the risk of the Company
and its service providers. Risk management procedures for the Company, as detailed in the
Company’s risk assessment matrix, were reviewed and approved by the Committee. Regular
reports are received from the Investment Manager and Administrator on the Company’s risk
evaluation process and reviews. Refer to the strategic report on pages 15 to 17 for details on
principal risks and uncertainties and their management. Financial risks faced by the Company are
discussed in note 19 of the Financial Statements on pages 110 to 122.
The Company’s AIFM, Ruffer AIFM Limited has responsibilities in law in relation to risk
management under the AIFMD.
Fraud, bribery and corruption – the Committee continues to monitor the fraud, bribery and
corruption policies of the Company. The Board receives a confirmation from all service providers
that there have been no instances of fraud, bribery or corruption.
The Auditor – in March 2015 the Board entered into a competitive audit tender process and
Deloitte LLP was appointed as the Company’s Auditor. The Company intends to conduct a tender
process at least every 10 years and to rotate auditors at least every 20 years, as recommended by
the UK Statutory Auditors and Third Country Auditors Regulations 2016.
Independence, objectivity and fees – the independence and objectivity of the Auditor is reviewed
by the Committee which also reviews the terms under which the Auditor is appointed to perform
non-audit services. The Committee has established pre-approval policies and procedures for the
engagement of Deloitte LLP to provide audit, assurance and tax services. The Auditor may not
provide a service which –
– places them in a position to audit their own work
– creates a mutuality of interest
70
– results in the Auditor developing close relationships with service providers of the Company
– results in the Auditor functioning as a manager or employee of the Company or
– puts the Auditor in the role of advocate of the Company.
The Committee takes into account relevant ethical and regulatory guidance regarding the provision
of non-audit services by the Auditor, and will report to the Board to identify any matters in respect
of which it considers that action or improvement is needed, and to make recommendations as to
the steps to be taken. The Board maintains a non-audit services policy which is reviewed
periodically and is available on the Company’s website at ruffer.co.uk/ric
The following table summarises the remuneration paid to the Auditor for audit and non-audit
services during the years ended 30 June 2023 and 2022.
30 June 23 £ 30 June 22 £
Statutory audit 90,000 50,000
Total audit fees 90,000 50,000
Interim review 21,000 9,000
Total non-audit related fees 21,000 9,000
The statutory audit fees for the year ended 30 June 2023 have increased in comparison to those
charged for the year ended 30 June 2022 as a result of the increasing demands of regulation and
additional charges in relation to the prior year.
No tax or other services were provided during the year.
Deloitte LLP also has safeguards in place to ensure objectivity and independence.
When considering the effectiveness and independence of the Auditor, and the effectiveness of the
audit process, the Committee meets regularly with the Auditor to discuss the audit plan and the
scope of the audit. The Committee also takes account of factors such as –
– the audit plan presented to them before each audit
– the post audit report including variations from the original plan
– changes in audit personnel
– the Auditor’s own internal procedures to identify threats to independence and
– feedback from both the Investment Manager and Administrator evaluating the performance of
the team.
71
Ruffer Investment Company Limited
The Committee has examined the scope and results of the audit, its cost effectiveness and the
independence and objectivity of the Auditor, with particular regard to non-audit fees, and is
satisfied that an effective audit has been completed with diligence and professional scepticism, that
the scope of the audit was appropriate and significant judgements have been challenged robustly.
It also considers Deloitte LLP, as Auditor, to be independent of the Company.
Re-appointment of the Auditor – At the AGM held on 2 December 2022, Deloitte LLP was
re-appointed as the Company’s Auditor.
Internal control and risk management systems
The Committee discussed with the Auditor the risk of misstatement in the Financial Statements
arising from the potential for the Company’s key service providers, the Investment Manager and
Administrator, to override controls.
At each quarterly Board meeting, compliance reports are provided by the Administrator, Company
Secretary and Investment Manager. The Board also receives confirmation from the Administrator
of its capability under its ISAE 3402 Type II audit report. No significant failings or weaknesses
were identified in these reports.
The Committee has reviewed the need for an internal audit function. The Committee is satisfied
that the systems and procedures employed by the Investment Manager and the Administrator
provide sufficient assurance that a sound system of internal control is maintained. An internal
audit function specific to the Company is therefore considered unnecessary.
For any questions on the activities of the Committee not addressed in the foregoing, members of
the Committee will attend each AGM to respond to such questions.
In finalising the Financial Statements for recommendation to the Board for approval, the
Committee has satisfied itself that the Financial Statements taken as a whole are fair, balanced and
understandable, and provide the information necessary for shareholders to assess the Company’s
performance, business model and strategy.
Susie Farnon
Chairman, Audit and Risk Committee
3 October 2023
72
The Management Engagement Committee presents here its report for the year ended 30 June
2023, setting out the responsibilities of the Committee and its key activities for the year from 1 July
2022 to 30 June 2023. The Committee meets annually in June each year and holds ad hoc
meetings to address any arising issues as required.
Responsibilities
The formally delegated duties and responsibilities of the Committee are set out in written terms of
reference which are available from the Company Secretary upon request and published on the
Company’s website at ruffer.co.uk/ric. The Committee’s terms of reference are reviewed on an
annual basis.
The principal duties of the Committee are to review the performance of and contractual
arrangements with the Investment Manager and all other key service providers to the Company,
other than the Auditor which is reviewed by the Audit and Risk Committee. In addition, the
Committee is involved in monitoring and reviewing the level of remuneration of the Investment
Manager to ensure that it is appropriate, competitive and sufficient to incentivise the Investment
Manager.
Key activities
The Committee conducts an annual review of the performance of, and contractual relationships
with, the Company’s key service providers, including the Investment Manager. To facilitate this
review, the Company Secretary circulates two detailed questionnaires to each service provider: one
relating to an assessment of the services provided during the year, any issues encountered and
feedback on other service providers; and a second requesting details of the service provider’s
internal control systems, business continuity plans, impact of covid-19 on business operations,
succession planning and any key staff changes, ESG policies and cyber security arrangements. In
addition, qualitative feedback on the performance and operations of each service provider is
obtained from each of the Directors, the Investment Manager, the Broker and the Company
Secretary. The Company Secretary prepares a summary of responses received which is presented
to the Committee for its review.
The last Committee meeting was held on 15 June 2023 and no material issues were identified as a
result of the annual service provider review. Accordingly, the Management Engagement
Committee recommended to the Board that the retention of the Company’s service providers was
in the best interests of the Company and its shareholders.
73
Ruffer Investment Company Limited
Management Engagement Committee
report
No material issues were identified during the Committee’s review of the Investment Manager and
the Board concluded that the Investment Manager had deep industry experience, an appropriate
investment strategy for the investment objectives of the Company and that the continued
appointment of the Investment Manager on the terms agreed, including management fees, was in
the best interests of the Company and its shareholders.
Shelagh Mason
Chairman, Management Engagement Committee
3 October 2023
74
Northern Trust (Guernsey) Limited has been appointed as Depositary to Ruffer Investment
Company Limited (the ‘Company’) in accordance with the requirements of Article 36 and Articles
21(7), (8) and (9) of the Directive 2011/61/EU of the European Parliament and of the Council of
8June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and
2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the ‘AIFM Directive’).
We have enquired into the conduct of Ruffer AIFM Limited (the ‘AIFM’) and the Company for the
year ended 30 June 2023, in our capacity as Depositary to the Company.
This report including the review provided below has been prepared for and solely for the
Shareholders in the Company. We do not, in giving this report, accept or assume responsibility for
any other purpose or to any other person to whom this report is shown.
Our obligations as Depositary are stipulated in the relevant provisions of the AIFM Directive and
the relevant sections of Commission Delegated Regulation (EU) No 231/2013 (collectively the
‘AIFMD legislation’) and the Authorised Closed-ended Investment Schemes Rules and Guidance
2021.
Amongst these obligations is the requirement to enquire into the conduct of the AIFM and the
Company and their delegates in each annual accounting period.
Our report shall state whether, in our view, the Company has been managed in that period in
accordance with the AIFMD legislation. It is the overall responsibility of the AIFM and the
Company to comply with these provisions. If the AIFM, the Company or their delegates have not so
complied, we as the Depositary will state why this is the case and outline the steps which we have
taken to rectify the situation.
The Depositary and its affiliates are or may be involved in other financial and professional
activities which may on occasion cause a conflict of interest with its roles with respect to the
Company. The Depositary will take reasonable care to ensure that the performance of its duties
will not be impaired by any such involvement and that any conflicts which may arise will be
resolved fairly and any transactions between the Depositary and its affiliates and the Company
shall be carried out as if effected on normal commercial terms negotiated at arm’s length and in
the best interests of Shareholders.
Report of the depositary to the shareholders of
Ruffer Investment Company Limited
75
Ruffer Investment Company Limited
Basis of Depositary Review
The Depositary conducts such reviews as it, in its reasonable discretion, considers necessary in
order to comply with its obligations and to ensure that, in all material respects, the Company has
been managed (i) in accordance with the limitations imposed on its investment and borrowing
powers by the provisions of its constitutional documentation and the appropriate regulations and
(ii) otherwise in accordance with the constitutional documentation and the appropriate
regulations. Such reviews vary based on the type of Fund, the assets in which a Fund invests and
the processes used, or experts required, in order to value such assets.
Review
In our view, the Company has been managed during the period, in all material respects –
i in accordance with the limitations imposed on the investment and borrowing powers of the
Company by the constitutional documents; and by the AIFMD legislation and
ii otherwise in accordance with the provisions of the constitutional documents and the AIFMD
legislation.
For and on behalf of
Northern Trust (Guernsey) Limited
3 October 2023
76
Report on the audit of the financial statements
Opinion
In our opinion the financial statements of Ruffer Investment Company Limited (the ‘Company’) –
– give a true and fair view of the state of the Company’s affairs as at 30 June 2023 and of its loss
for the year then ended
– have been properly prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and
– have been prepared in accordance with the requirements of the Companies (Guernsey) Law,
2008.
We have audited the financial statements which comprise –
– the Statement of Financial Position
– the Statement of Comprehensive Income
– the Statement of Changes in Equity
– the Statement of Cash Flows and
– the related notes 1 to 21.
The financial reporting framework that has been applied in their preparation is applicable law and
IFRSs as adopted by European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the
auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the
‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. The non-audit services
provided to the Company for the year are disclosed in note 9 to the financial statements. We
confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical
Standard to the Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independent auditor’s report to the Members of
Ruffer Investment Company Limited
77
Ruffer Investment Company Limited
Summary of our audit approach
Key audit matters The key audit matter that we identified in the current year (and
which was consistent with the prior year) was –
– valuation and ownership of investments
Materiality The materiality that we used in the current year was £10.92 million
which was determined on the basis of 1% of Net Asset Value (NAV) of
the Company as at 30 June 2023.
Scoping Balances were scoped in for testing based on our assessment of risk
of material misstatement. As part of our risk assessment process, we
considered the impact of relevant controls implemented at the
service providers.
There are no significant changes in our audit approach in the current
year audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going
concern basis of accounting included –
– considering the effect of current macroeconomic conditions to the Company and valuation of
its portfolio
– evaluating the judgements and decisions with regards to key forecasting assumptions used in
the going concern assessment
– assessing reasonableness of assumptions on cash flow forecasts for the next three years, used
in supporting the use of the going concern assumption and
– assessing the relevant disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating
to events or conditions that, individually or collectively, may cast significant doubt on the
Company’s ability to continue as a going concern for a period of at least twelve months from when
the financial statements are authorised for issue.
In relation to the reporting on how the Company has applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation to the Directors’ statement in the
Significant changes in
our approach
78
financial statements about whether the Directors considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are
described in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on the overall audit strategy, the allocation of
resources in the audit and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
1.1 Valuation and ownership of investments
Key audit matter description
Included in the Company’s Statement of Financial Position as at 30 June 2023 are investments
with a fair value of £1,038 million (2022: £852 million) as disclosed in Note 10 to the financial
statements. The Company’s portfolio primarily comprises equity investments, government bonds
and investment funds. Investments are key area of focus to the users of the financial statements
given that they are the most quantitatively significant balance and main driver of the Company’s
performance and NAV. As explained in Note2 (e), the Company’s accounting policy is to measure
its investment at fair value through profit and loss. Refer to consideration made by the audit
committee on valuation of investments discussed on page 69.
The identified risks were –
– there might be errors or fraudulent manipulation of valuation in order to report favourable key
performance indicators
– inappropriate exchange rates might be used to convert foreign currency denominated
investment to the Company’s reporting currency
– trades made immediately before year-end might be excluded from the valuation or conversely,
trades made immediately after the year end might be included in the valuation in error and
– the Company might not have legal title to the investment held at year end.
79
Ruffer Investment Company Limited
How the scope of our audit responded to the key audit matter
To respond to the key audit matter, we have performed the following audit procedures –
– obtained an understanding and tested relevant controls around the valuation and ownership of
investments and NAV preparation process by the administrator
– agreed investments held as at year end to independently obtained custodian confirmation
– assessed the reasonableness of exchange rates used in converting investments denominated in
currencies other than the Pound Sterling by comparing rates used to independent sources
– assessed purchases and sales made around year end to determine whether transactions had
been recorded in the correct period
– reconciled the investment purchases and sales transactions to the custodian trade report for
the year and
– agreed the unit prices of all investments to independent pricing sources.
Key observations
Based on the results of procedures, we concluded that –
– the prices applied by management in the valuation of investments are reasonable
– investment denominated in currencies other than Pound Sterling have been appropriately
converted at a reasonable spot rate at year end
– the Company had proper legal title to the investments held at year end and
– the investment transactions have been accounted for in the correct accounting period.
Our application of materiality
1.2 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it
probable that the economic decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our audit work and in evaluating the
results of our work.
80
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows –
Materiality £10,920,000 (2022: £9,527,000)
Basis for determining materiality 1% (2022: 1%) of NAV
Rationale for the benchmark applied NAV is the most appropriate benchmark as it is considered one of the
principal drivers for members of the Company in assessing financial
performance and represents total shareholders’ interest.
1.3 Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in
aggregate, uncorrected and undetected misstatements exceed the materiality for the financial
statements as a whole. Performance materiality was set at 70% of materiality for the 2023 audit
(2022: 70%). In determining performance materiality, we considered the following factors –
a the quality of the control environment and whether we were able to rely on controls,
b our risk assessment, including our assessment of the Company’s overall control environment
and
c our past experience of the audit, which has indicated a low number of corrected and
uncorrected misstatements identified in prior periods.
Net Asset Value
£1,092,040,335
Audit Committee
reporting threshold
£546,000
Materiality
£10,920,000
81
Ruffer Investment Company Limited
1.4 Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences
in excess of £546,000 (2022: £476,000), as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall presentation of the financial
statements.
An overview of the scope of our audit
1.5 Scoping
Our audit was scoped by obtaining an understanding of the Company and its environment,
including internal control, and assessing the risks of material misstatement. Audit work to respond
to the risks of material misstatement was performed directly by the audit engagement team.
1.6 Our consideration of the control environment
The Company is administered by a third party Guernsey regulated service provider. As part of our
audit, we obtained an understanding and tested relevant controls around the valuation and
ownership of investments and NAV preparation process established at the service provider. We
inspected weekly and monthly NAV checklists and accompanying reports on a sample basis.
1.7 Our consideration of climate-related risks
As part of our audit we made enquiries of management to understand the process they have
adopted to assess the potential impact of climate change on the financial statements. Management
considers that the impact of climate change does not give rise to a material financial statement
impact as described on page 17. We applied our knowledge of the Company to evaluate
management’s assessment. We also read the annual report to consider whether the disclosures in
relation to climate change made in the other information within the annual report are materially
consistent with the financial statements and our knowledge obtained in our audit.
Other information
The other information comprises the information included in the annual report other than the
financial statements and our auditor’s report thereon. The Directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
82
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in
the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on
the FRC’s website at frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
83
Ruffer Investment Company Limited
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed below.
1.8 Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations, we considered the following –
– the nature of the industry and sector, control environment and business performance
including the design of the Company’s remuneration policies
– results of our enquiries of management and the Audit Committee about their own
identification and assessment of the risks of irregularities, including those that are specific to
the company’s sector
– any matters we identified having obtained and reviewed the Company’s documentation of their
policies and procedures relating to –
– identifying, evaluating and complying with laws and regulations and whether they were
aware of any instances of non-compliance
– detecting and responding to the risks of fraud and whether they have knowledge of any
actual, suspected or alleged fraud
– the internal controls established to mitigate risks of fraud or non-compliance with laws and
regulations
– the matters discussed among the audit engagement team including our financial instruments
specialists regarding how and where fraud might occur in the financial statements and any
potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist
within the organisation for fraud and identified the greatest potential for fraud in the valuation and
ownership of investments. In common with all audits under ISAs (UK), we are also required to
perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the Company
operates in, focusing on provisions of those laws and regulations that had a direct effect on the
determination of material amounts and disclosures in the financial statements. The key laws and
84
regulations we considered in this context included the Companies (Guernsey) Law, 2008, the
Listing Rules and relevant tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect
on the financial statements but compliance with which may be fundamental to the Company’s
ability to operate or to avoid a material penalty.
1.9 Audit response to risks identified
As a result of performing the above, we identified valuation and ownership of investments as a key
audit matter related to the potential risk of fraud. The key audit matters section of our report
explains the matter in more detail and also describes the specific procedures we performed in
response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following –
– reviewing the financial statement disclosures and testing to supporting documentation to
assess compliance with provisions of relevant laws and regulations described as having a direct
effect on the financial statements
– enquiring of management and the Audit Committee concerning actual and potential litigation
and claims
– performing analytical procedures to identify any unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud
– reading minutes of meetings of the Board and the Audit Committee and reviewing
correspondence with Guernsey Financial Services Commission and
– in addressing the risk of fraud through management override of controls, testing the
appropriateness of journal entries and other adjustments assessing whether the judgements
made in making accounting estimates are indicative of a potential bias and evaluating the
business rationale of any significant transactions that are unusual or outside the normal course
of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all
engagement team members including financial instrument specialists, and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit.
85
Ruffer Investment Company Limited
Report on other legal and regulatory requirements
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement relating to the
Company’s compliance with the provisions of the UK Corporate Governance Code specified for our
review.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial
statements and our knowledge obtained during the audit –
– the Directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified set out on page 17
– the Directors’ explanation as to its assessment of the Company’s prospects, the period this
assessment covers and why the period is appropriate set out on page 18
– the Directors’ statement on fair, balanced and understandable as set out on pages 49 to 50
– the Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 15
– the section of the annual report that describes the review of effectiveness of risk management
and internal control systems set out on page 72 and
– the section describing the work of the Audit Committee set out on pages 68 to 72.
Matters on which we are required to report by exception
1.10 Adequacy of explanations received and accounting records
Under the Companies (Guernsey) Law, 2008 we are required to report to you if, in our opinion –
– we have not received all the information and explanations we require for our audit or
– proper accounting records have not been kept or
– the financial statements are not in agreement with the accounting records.
We have nothing to report in respect of these matters.
86
Other matters which we are required to address
1.11 Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the Board on
19March 2015 to audit the financial statements for the year ending 30 June 2015 and subsequent
financial periods. The period of total uninterrupted engagement including previous renewals and
reappointments of the firm is 9 years, covering the years ending 30 June 2015 to 30 June 2023.
1.12 Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the audit committee we are required
to provide in accordance with ISAs (UK).
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Section 262 of
the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state
to the Company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Guidance and Transparency Rule (DTR)
4.1.14R, these financial statements form part of the European Single Electronic Format (ESEF)
prepared Annual Financial Report filed on the National Storage Mechanism of the UK FCA in
accordance with the ESEF Regulatory Technical Standard (ESEF RTS). This auditor’s report
provides no assurance over whether the annual financial report has been prepared using the single
electronic format specified in the ESEF RTS.
Theo Brennand
For and on behalf of Deloitte LLP
Recognised Auditor
St Peter Port, Guernsey
3 October 2023
87
Ruffer Investment Company Limited
88
Notes 30 June 23 £ 30 June 22 £
Assets
Non-current assets
Investments at fair value through profit or loss 10 1,037,539,714 852,380,832
Current assets
Cash and cash equivalents 50,508,224 91,882,581
Trade and other receivables 11 1,992,046 29,702,666
Derivative financial assets 18, 19 3,497,285 989,682
Total current assets 55,997,555 122,574,929
Total assets 1,093,537,269 974,955,761
Liabilities
Current liabilities
Trade and other payables 12 1,496,934 21,667,315
Derivative financial liabilities 18, 19 – 503,673
Total liabilities 1,496,934 22,170,988
Net assets 1,092,040,335 952,784,773
Equity
Capital and reserves attributable to the Company’s shareholders
Share capital 13 791,710,799 608,654,303
Capital reserve 193,130,681 240,914,299
Retained revenue reserve 12,149,296 8,166,612
Other reserves 95,049,559 95,049,559
Total equity 1,092,040,335 952,784,773
Net assets attributable to holders of redeemable
participating preference shares (per share) 14 2.8474 2.9498
The Financial Statements on pages 88 to 124 were approved on 3 October 2023 and signed on
behalfof the Board of Directors by
Christopher Russell Susie Farnon
Chairman Director
Statement of financial position
as at 30 June 2023
The notes on pages 92 to 124 form an integral part of these Financial Statements.
89
Ruffer Investment Company Limited
Year ended Year ended
Notes Revenue £ Capital £ 30 June 23 £ 30 June 22 £
Fixed interest income 8,516,370 – 8,516,370 1,521,125
Dividend income 5,943,455 – 5,943,455 9,375,207
Bank interest income 528,540 – 528,540 3,276
Net changes in fair value of financial
assets at fair value through profit or loss 6 – (53,713,731) (53,713,731) 42,910,229
Other gains/(losses) 7 – 16,742,015 16,742,015 (15,411,877)
Total income 14,988,365 (36,971,716) (21,983,351) 38,397,960
Management fees 8 – (10,517,318) (10,517,318) (7,077,617)
Other expenses 9 (1,001,012) (294,584) (1,295,596) (853,105)
Total expenses (1,001,012) (10,811,902) (11,812,914) (7,930,722)
(Loss)/profit for the year before tax 13,987,353 (47,783,618) (33,796,265) 30,467,238
Withholding tax 4 (619,657) – (619,657) (856,738)
(Loss)/profit for the year after tax 13,367,696 (47,783,618) (34,415,922) 29,610,500
Total comprehensive (loss)/income for the year 13,367,696 (47,783,618) (34,415,922) 29,610,500
Basic and diluted (loss)/earnings per share 3.70p (13.23)p (9.53)p 11.83p
The ‘Total’ columns of this statement represent the Company’s condensed statement of
comprehensive income, prepared in accordance with International Financial Reporting Standards
as adopted by the European Union.
The revenue and capital return columns are prepared under guidance published by the Association
of Investment Companies. All revenue and capital items in the above statement derive from
continuing operations.
Basic and diluted earnings per share are calculated by dividing the profit after taxation by the
weighted average number of redeemable participating preference shares in issue during the year.
The weighted average number of shares for the year was 361,081,202 (30 June 2022:
250,324,202). As there are no items which would cause a dilution to occur, the basic and diluted
earnings per share are the same.
Statement of comprehensive income
for the year ended 30 June 2023
The notes on pages 92 to 124 form an integral part of these Financial Statements.
90
Retained Total year
Share Capital revenue Other ended
Notes capital £ reserve £ reserve* £ Reserves* £ 30 June 23 £
Balance at 1 July 2022 608,654,303 240,914,299 8,166,612 95,049,559 952,784,773
Total comprehensive
income/(loss) for the year – (47,783,618) 13,367,696 – (34,415,922)
Transactions with shareholders
Share capital issued 13 184,342,250 – – – 184,342,250
Share issue costs 13 (1,285,754) – – – (1,285,754)
Distributions during the year 5 – – (9,385,012) – (9,385,012)
Balance at 30 June 2023 791,710,799 193,130,681 12,149,296 95,049,559 1,092,040,335
Retained Total year
Share Capital revenue Other ended
Notes capital £ reserve £ reserve* £ Reserves* £ 30 June 22 £
Balance at 1 July 2021 253,904,821 220,493,564 6,403,389 95,049,559 575,851,333
Total comprehensive income
for the year – 20,420,735 9,189,765 – 29,610,500
Transactions with shareholders
Share capital issued 357,810,233 – – – 357,810,233
Share issue costs (3,060,751) – – – (3,060,751)
Distributions during the year 5 – – (7,426,542) – (7,426,542)
Balance at 30 June 2022 608,654,303 240,914,299 8,166,612 95,049,559 952,784,773
* Under The Companies (Guernsey) Law, 2008, the Company can distribute dividends from share capital and reserves, subject to satisfying a solvency test. However,
the Company’s dividend policy is that dividends will only be paid from accumulated revenue reserves. In order to provide clearer information relating to reserves
available for distribution, the Company has separately identified this reserve in these financial statements as a ‘Retained revenue reserve’ in the Statement of
Financial Position and the Statement of Changes in Equity. ‘Other reserves’ represents amounts converted from share premium in 2004 and 2008.
Statement of changes in equity
for the year ended 30 June 2023
The notes on pages 92 to 124 form an integral part of these Financial Statements.
91
Ruffer Investment Company Limited
Year ended Year ended
Notes 30 June 23 £ 30 June 22 £
Cash flows from operating activities
(Loss)/profit for the year after tax (34,415,922) 29,610,500
Adjustments for
Net realised gains on investments 6 (38,771,841) (40,408,074)
Unrealised losses/(gains) on investments 6 92,485,572 (2,502,155)
Realised (gains)/losses on forward foreign exchange contracts 7 (13,452,548) 17,727,792
Unrealised gains on forward foreign exchange contracts 7 (3,011,276) (2,644,151)
Foreign exchange (gains)/losses on cash and cash equivalents 7 (278,191) 328,236
Increase in trade and other receivables (excluding amounts
due in respect of sales of investments and share issues) (498,304) (628,286)
Increase in trade and other payables (excluding amounts
due in respect of purchases of investments an share issue costs) 220,978 282,338
2,278,468 1,766,200
Net cash received/(paid) on closure of forward foreign exchange
contracts 7 13,452,548 (17,727,792)
Purchases of investments (1,529,460,934) (810,785,573)
Sales of investments 1,298,549,953 514,371,720
Net cash used in operating activities (215,179,965) (312,375,445)
Cash flow from financing activities
Dividends paid 5 (9,385,012) (7,426,542)
Proceeds from issue of redeemable participating preference shares 184,342,250 359,096,108
Share issue costs (1,429,821) (2,916,684)
Net cash generated from financing activities 173,527,417 348,752,882
Net (decrease)/increase in cash and cash equivalents (41,652,548) 36,377,437
Cash and cash equivalents at the beginning of the year 91,882,581 55,833,380
Foreign exchange gains/(losses) on cash and cash equivalents 7 278,191 (328,236)
Cash and cash equivalents at the end of the year 50,508,224 91,882,581
Statement of cash flows
for the year ended 30 June 2023
The notes on pages 92 to 124 form an integral part of these Financial Statements.
92
1 The Company
The Company was incorporated with limited liability in Guernsey on 1 June 2004 as a company
limited by shares and as an authorised closed-ended investment company. As an existing
closed-ended fund the Company is deemed to be granted an authorised declaration in accordance
with section 8 of the Protection of Investors (Bailiwick of Guernsey) Law, 2020, as amended and
rule 6.02 of the Authorised Closed-ended Investment Schemes Rules and Guidance 2021. The
Company is listed on the Main Market of the London Stock Exchange (LSE) and was admitted to
the premium segment of the Official List of the UK Listing Authority on 20 December 2005.
The Company’s registered office is shown on page 131 and details of its investment objective and
strategy are shown on page 11.
2 Significant accounting policies
a Statement of compliance
The Financial Statements of the Company for the year ended 30 June 2023 have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted by the European
Union and the Listing Rules of the London Stock Exchange in compliance with the Companies
(Guernsey) Law, 2008.
b Basis of preparation
The Financial Statements are prepared in pound sterling (£), which is the Company’s functional
and presentation currency. The Financial Statements have been prepared on a going concern basis
under the historical cost convention, as modified by the revaluation of financial assets and
financial liabilities at fair value through profit or loss.
c Going concern
The Directors believe that it is appropriate to continue to adopt the going concern basis in
preparing the Financial Statements since the assets of the Company consist mainly of cash and
cash equivalents and securities which are readily realisable. The Directors also note that overall,
due to the nature of the Company’s portfolio, which comprises both equities and other more
defensive assets, it has not been affected significantly in terms of value or cashflows by the effects
of the Russian invasion of Ukraine, or the cost of living crisis and rising interest rates arising from
the current high-inflation economic environment. Accordingly, in the Directors’ opinion, the
Company has adequate financial resources to continue in operational existence for the foreseeable
future. Matters relating to the going concern status of the Company are also discussed in the
long-term viability statement on page 18.
Notes to the Financial Statements
for the year ended 30 June 2023
93
Ruffer Investment Company Limited
d New accounting standards and amendments effective and adopted
The following relevant standard has been applied in these Financial Statements during the year –
– IAS 37 (amended), ‘Provisions, Contingent Liabilities and Contingent Assets’ – (effective for
accounting periods commencing on or after 1 January 2022)
The amendments to IAS 37 were published in May 2020 and relate to the costs to include when
assessing whether a contract is onerous.
In addition, the IASB has issued the following publication –
– ‘Annual Improvements to IFRS Standards 2018-2020’, published in May 2020, which has
amended certain existing standards, effective for accounting periods commencing on or after
1January 2022.
In the opinion of the Directors, the adoption of these new and amended standards has had no
material impact on the Financial Statements of the Company.
Standards and amendments in issue but not yet effective
The following relevant IFRSs, which have not been applied in these Financial Statements, were in
issue at the reporting date but not yet effective –
– IAS 1 (amended), ‘Presentation of Financial Statements’ – (effective for accounting periods
commencing on or after 1 January 2023)
– IAS 8 (amended), ‘Accounting Policies, Changes in Accounting Estimates and Errors’ –
(effective for accounting periods commencing on or after 1 January 2023)
The amendments to IAS 1 were published in January 2020 and February 2021 and relate to the
classification of liabilities and disclosure of accounting policies respectively.
The amendments to IAS 8 were published in February 2021 and clarify how companies should
distinguish changes in accounting policies from changes in accounting estimates.
The changes arising from the amendments to these IFRSs are either presentational and/or minor
in nature. It is therefore anticipated that the adoption of these amended standards will have no
material impact on the Financial Statements of the Company.
In addition, the International Sustainability Standards Board (ISSB) published the following
Sustainability Disclosure Standards in June 2023, effective for accounting periods commencing on
or after 1 January 2024 –
– IFRS S1, ‘General Requirements for Disclosure of Sustainability-related Financial Information’
– IFRS S2, ‘Climate-related Disclosures’
94
IFRS S1 sets out overall requirements with the objective to require an entity to disclose
information about its sustainability-related risks and opportunities.
IFRS S2 sets out the requirements for identifying, measuring and disclosing information about
climate-related risks and opportunities.
The purpose of both standards is to provide information that is useful to primary users of general
purpose financial reports in making decisions relating to providing resources to the entity.
e Financial instruments
i Classification
Financial assets are classified into the following categories: financial assets at fair value through
profit or loss and financial assets at amortised cost.
The classification depends on the nature and purpose of the financial assets and is determined at
the time of initial recognition.
The Company’s financial assets at fair value through profit or loss comprise investment assets and
derivative assets in the form of forward foreign currency exchange contracts.
The Company’s financial assets at amortised cost comprise trade and other receivables and cash
and cash equivalents.
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or
financial liabilities at amortised cost.
The Company’s financial liabilities at fair value through profit or loss comprise derivative liabilities
in the form of forward foreign currency exchange contracts.
The Company’s financial liabilities at amortised cost comprise trade and other payables.
ii Investments at fair value through profit or loss (‘investments’)
Recognition
Investments are recognised in the Company’s Statement of Financial Position when the Company
becomes a party to the contractual provisions of the instrument.
Purchases and sales of investments are recognised on the trade date (the date on which the
Company commits to purchase or sell the investment). Investments purchased are initially
recorded at fair value, being the consideration given. Transaction or other dealing costs associated
with purchases and sales of investments are recognised through profit or loss in the Statement of
Comprehensive Income.
Measurement
Subsequent to initial recognition, investments are measured at fair value. Gains and losses arising
from changes in the fair value of investments and gains and losses on investments that are sold are
recognised through profit or loss in the Statement of Comprehensive Income within net changes in
fair value of financial assets at fair value through profit or loss.
Investments traded in active markets are valued at the latest available bid prices ruling at midnight
on the reporting date. The Directors are of the opinion that the bid-market prices are the best
estimate of fair value. Investments consist of listed or quoted equities or equity-related securities,
options and bonds which are issued by corporate issuers, supra-nationals or government
organisations, and investment in funds.
Shares in some investment funds are not listed on an actively traded exchange and these are
valued on the reporting date at the latest NAV from the administrator of the respective investment
funds as the most recent price is the best estimate of the amount for which holdings could have
been disposed of at the reporting date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. Gains and losses arising
from changes in the fair value of financial assets/(liabilities) are shown as net gains or losses on
financial assets through profit or loss (see note 10) and recognised in the Statement of
Comprehensive Income in capital in the period in which they arise.
Realised gains and losses arising on disposal of investments are calculated by reference to the
proceeds received on disposal and the average cost attributable to those investments, and are
recognised in the Statement of Comprehensive Income in capital. Unrealised gains and losses on
investments are recognised in the Statement of Comprehensive Income in capital.
iii Derivatives
Forward foreign currency contracts are treated as derivative contracts and as such are recognised
at fair value on the date on which they are entered into and subsequently remeasured at their fair
value. Fair value is determined by rates in active currency markets. All derivatives are carried as
assets when fair value is positive and as liabilities when fair value is negative. The gain or loss on
remeasurement to fair value is recognised immediately through profit or loss in the Statement of
Comprehensive Income within other gains in the period in which they arise.
95
Ruffer Investment Company Limited
96
iv Financial instruments at amortised cost
Trade and other receivables
Trade and other receivables are amounts due in the ordinary course of business and are classified
as current assets if collection is expected in one year or less. If not, they are presented as
non-current assets. Trade and other receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method, less provision for
impairment, such impairment to be determined using the simplified expected credit losses
approach in accordance with IFRS 9.
At each reporting date, the Company measures the loss allowance on its trade and other
receivables at an amount equal to the lifetime expected credit losses. Expected credit losses are
estimated based on the Company’s historical credit loss experience, adjusted for factors that are
specific to the financial asset, general economic conditions and an assessment of both the current
as well as the forecast direction of conditions at the reporting date, including the time value of
money where appropriate.
Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid
investments with original maturities of three months or less and bank overdrafts.
Trade and other payables
Trade and other payables are obligations to pay for services that have been acquired in the
ordinary course of business and are classified as current liabilities if payment is due within one
year or less. If not, they are presented as non-current liabilities. Trade and other payables are
recognised initially at fair value plus any directly attributable incremental costs of acquisition or
issue and subsequently measured at amortised cost using the effective interest rate method.
v Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the Statement of
Financial Position if, and only if, there is a currently enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net basis, or to realise assets and settle the
liabilities simultaneously.
vi Derecognition of financial instruments
A financial asset is derecognised when: (a) the rights to receive cash flows from the asset have
expired, (b) the Company retains the right to receive cash flows from the asset, but has assumed an
obligation to pay them in full without material delay to a third party under a ‘pass through
97
Ruffer Investment Company Limited
arrangement’; or (c) the Company has transferred substantially all the risks and rewards of the
asset, or has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset. A financial liability is derecognised when the obligation
under the liability is discharged, cancelled or expired.
f Income
The Company has no income that falls within the scope of IFRS 15, therefore all income is
recognised in accordance with IFRS 9. Dividend income from equity investments is recognised
when the relevant investment is quoted ex-dividend, and is included gross of withholding tax.
Interest income is recognised for all debt instruments using the effective interest rate method.
Dividend and interest income are recognised through profit or loss in the Statement of
Comprehensive Income in revenue.
g Expenses
Expenses are accounted for on an accruals basis and are recognised through profit or loss in the
Statement of Comprehensive Income in either capital or revenue reserves. The Company’s
management fees are allocated between capital and revenue in a ratio determined by the Board at
its sole discretion. Currently 100% of the management fees are charged to capital, as are
transaction costs on the purchase and sale of investments. All other expenses of the Company are
recognised in revenue.
h Translation of foreign currency
Functional and presentation currency
The Financial Statements of the Company are presented in the currency of the primary economic
environment in which the Company operates (its ‘functional currency’). The Directors have
considered the currency in which the original capital was raised, distributions will be made and
ultimately the currency in which capital would be returned in a liquidation. On balance, the
Directors believe that pound sterling best represents the functional currency of the Company. For
the purpose of the Financial Statements, the results and financial position of the Company are
expressed in pound sterling, which is the presentation currency of the Company.
Foreign currency transactions are translated into the functional currency using the exchange rate
prevailing at the transaction date. Foreign exchange gains and losses resulting from the settlement
of such transactions and those from the translation at period end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the Statement of
Comprehensive Income.
Translation differences on non-monetary items such as financial assets held at fair value through
profit or loss are reported as part of net changes in fair value on financial assets through profit or
loss in the Statement of Comprehensive Income.
i Share issue costs
Share issue costs are fully written off against the share capital account in the period of the share
issue in accordance with Guernsey company law.
j Redeemable participating preference shares
As the Company’s redeemable participating preference shares are redeemable at the sole option of
the Directors, they are required to be classified as equity instruments. Please refer to note 13 for
further details.
3 Significant accounting judgements, estimates and assumptions
The preparation of the Financial Statements in conformity with IFRS requires management to
make judgements, estimates and assumptions that affect the application of policies and the
reported amounts of assets and liabilities, income and expense and the accompanying disclosures.
Uncertainty about these assumptions and estimates could result in outcomes that require a
material adjustment to the carrying amount of assets or liabilities affected in future periods.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period, or in the period of revision and future periods if the revision affects both
current and future periods.
Judgements
In the opinion of the Directors, there are no significant judgements made that have had a material
effect on the Financial Statements.
Estimates
The Company records its investments and derivatives at fair value. Investments classified in level 1
of the fair value hierarchy (see note 19) are measured at fair value based on a quoted price in an
active market. However the fair value of investments classified in level 2 and level 3 of the fair
value hierarchy and of forward foreign exchange contracts are determined at the valuation date on
the basis of estimates based on the reported NAVs of the investments and prevailing exchange
rates respectively. The Directors consider that these valuations represent the best estimate of the
98
fair values of the Company’s level 2 and level 3 investments and derivatives. Details of the
valuation methodologies applied in determining the fair value of the Company’s investments are
disclosed in note 19.
4 Taxation
The Company has been granted Exempt Status under the terms of The Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989 to income tax in Guernsey. Its liability is an annual fee of
£1,200 (30 June 2022: £1,200).
The amounts disclosed as taxation in the Statement of Comprehensive Income relate solely to
withholding tax deducted at source on income.
5 Dividends to shareholders
Dividends, if any, are declared semi-annually, usually in October and March each year. The
Company paid and declared the following dividends during the year –
Year ended Year ended
30 June 23 £ 30 June 22 £
2022 Second interim dividend of 1.25p (2021: 1.55p) 4,311,472 3,424,158
2023 First interim dividend of 1.35p (2022: 1.50p) 5,073,540 4,002,384
9,385,012 7,426,542
A second interim dividend of 1.65p per share in respect of the year ended 30 June 2023 was
declared on 4 October 2023. The dividend is payable on 27 October 2023 to shareholders on
record at 13October 2023.
99
Ruffer Investment Company Limited
100
6 Net changes in financial assets at fair value through profit or loss
Year ended Year ended
30 June 23 £ 30 June 22 £
Gains realised on investments sold during the year 94,589,633 56,835,062
Losses realised on investments sold during the year (55,817,792) (16,426,988)
Net realised gains on investments sold during the year (see note 10) 38,771,841 40,408,074
Movement in unrealised (losses)/gains arising from changes in fair value (92,485,572) 2,502,155
Net changes in fair value on financial assets at fair value through profit or loss (53,713,731) 42,910,229
7 Other gains/(losses)
Year ended Year ended
30 June 23 £ 30 June 22 £
Movement in unrealised gains on spot and forward foreign exchange
currency contracts 3,011,276 2,644,151
Realised gains/(losses) on spot and forward foreign currency contracts 13,452,548 (17,727,792)
Other realised and unrealised foreign exchange gains/(losses) 278,191 (328,236)
16,742,015 (15,411,877)
8 Management fees
The management fees were charged to the capital reserves of the Company. The management fees
for the year, including outstanding balances at end of the year, are detailed below.
Year ended Year ended
30 June 23 £ 30 June 22 £
Management fees for the year 10,517,318 7,077,617
Management fees payable at the end of the year 880,118 750,697
The basis for calculating the management fees is set out in the General Information on page 129.
9 Other expenses
Year ended Year ended
30 June 23 £ 30 June 22 £
Expenses charged to revenue
Administration fee* 256,707 206,167
Directors’ fees 238,875 185,900
Custodian and Depositary fees* 177,237 135,383
Broker’s fees 38,750 34,856
Audit fee 90,000 50,000
Auditor’s remuneration for interim review 21,000 9,000
Legal and professional fees 28,298 79,717
Registrar fees 68,099 61,494
General expenses 82,046 90,588
1,001,012 853,105
Expenses charged to capital
Investment transaction costs 294,584 –
Total other expenses 1,295,596 853,105
* The basis for calculating the Administration fees, Custodian and Depositary fees is set out in the General Information on pages 129 to 130.
Ongoing charges ratio
The ongoing charges ratio (OCR) of an investment company is the annual percentage reduction in
shareholder returns as a result of recurring operational expenditure. Ongoing charges are
classified as those expenses which are likely to recur in the foreseeable future, and which relate to
the operation of the company, excluding investment transaction costs, financing charges and gains
or losses on investments. The OCR is calculated as the total ongoing charges for a period divided
by the average net asset value over that period.
101
Ruffer Investment Company Limited
102
Year ended Year ended
30 June 23 £ 30 June 22 £
Management fee (see note 8) 10,517,318 7,077,617
Other expenses (see above) 1,295,596 853,105
11,812,914 7,930,722
Excluded expenses* (294,584) (58,300)
Total ongoing expenses 11,518,330 7,872,422
Average NAV
†
1,076,002,874 735,348,568
Ongoing charges ratio (using AIC methodology) 1.07% 1.07%
* Current year excluded expenses comprise security transaction costs. Prior year excluded expenses principally comprises fees relating to board recruitment and
evaluation.
† Average NAV is calculated as the average of all the NAVs published on the LSE during the year.
10 Investment assets at fair value through profit or loss
Year ended Year ended
30 June 23 £ 30 June 22 £
Cost of investments at the start of the year 787,014,198 453,896,021
Acquisitions at cost during the year 1,509,213,642 831,430,861
Disposals during the year (1,270,341,029) (538,720,758)
Gains on disposals during the year 38,771,841 40,408,074
Cost of investments held at the end of the year 1,064,658,652 787,014,198
Fair value (below)/above cost (27,118,938) 65,366,634
Fair value of investments held at the end of the year 1,037,539,714 852,380,832
11 Trade and other receivables
30 June 23 £ 30 June 22 £
Amounts receivable within one year
Investment income receivable 57,062 469,656
Fixed interest income receivable 1,750,222 843,086
Sales of investments awaiting settlement 166,667 28,375,591
Other receivables – 7,276
Prepayments 18,095 7,057
1,992,046 29,702,666
103
Ruffer Investment Company Limited
The Directors consider that the carrying amounts of trade and other receivables approximate to
their fair value. All receivables are short-term, with settlement due within a few days or months of
the year end, as a result of which the Company’s exposure to default risk is negligible and no credit
losses are expected.
12 Trade and other payables
30 June 23 £ 30 June 22 £
Amounts falling due within one year
Purchases of investments awaiting settlement 397,996 20,645,288
Management fees payable 880,118 750,697
Other payables 218,820 271,330
1,496,934 21,667,315
The Directors consider that the carrying amounts of trade and other payables approximate to their
fair value.
13 Share capital
30 June 23 £ 30 June 22 £
Authorised share capital
Unlimited unclassified shares of 0.01p each Unlimited Unlimited
75,000,000 C shares of 0.1p each 75,000 75,000
Unlimited Unlimited
The Company’s share capital comprises 75,000,000 C shares of 0.1p each, and an unlimited
number of unclassified shares of 0.01p each.
Number of shares Share capital
–––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––––––
Year ended Year ended Year ended Year ended
30 June 23 30 June 22 30 June 23 30 June 22
Issued share capital
Redeemable participating preference
shares of 0.01p each
Balance at the start of the year 323,002,764 204,718,416 608,654,303 253,904,821
Issued and fully paid during the year 60,515,000 118,284,348 184,342,250 357,810,233
Share issue costs – – (1,285,754) (3,060,751)
Balance at the end of the year 383,517,764 323,002,764 791,710,799 608,654,303
Unclassified shares
Unclassified shares can be issued as nominal shares or redeemable participating preference shares.
Nominal shares can only be issued at par to the Administrator. The Administrator is obliged to
subscribe for nominal shares for cash at par when redeemable participating preference shares are
redeemed to ensure that funds are available to redeem the nominal amount paid up on redeemable
participating preference shares. The holder or holders of nominal shares shall have the right to
receive notice of and to attend general meetings of the Company but shall not be entitled to vote
thereat. Nominal shares shall carry no right to dividends. In a winding-up, holders of nominal
shares shall be entitled to be repaid an amount equal to their nominal value out of the assets of the
Company.
The holders of fully paid redeemable participating preference shares are entitled to one vote at all
meetings of the relevant class of shareholders. Participating preference shares carry the right to
receive dividends or other distributions declared by the Company. In a winding-up, participating
preference shareholders shall be entitled, firstly, to an amount equal to the nominal value of their
shareholding, and, secondly, to a proportionate share of the balance of assets remaining in the
Company after settlement of amounts due to nominal shareholders.
C shares
There were no C Shares in issue at year end (30 June 2022: Nil).
104
Block listing and additional shares issued
As at 30 June 2022, the Company had the ability to issue 35,750,000 redeemable participating
preference shares under a block listing facility.
– on 29 November 2022, the Company announced that an application had been made for the
block listing of an additional 9,106,551 redeemable participating preference shares, with an
admission date of 30 November 2022.
– on 15 December 2022, the Company announced that an application had been made for the
block listing of an additional 25,000,000 redeemable participating preference shares, with an
admission date of 20 December 2022.
During the year, 60,515,000 new redeemable participating preference shares were allotted or
issued under the block listing facility (30 June 2022: 104,497,127 redeemable participating
preference shares issued). As at 30 June 2023, the Company had the ability to issue 9,341,551
redeemable participating preference shares under the block listing facility.
New redeemable participating preference shares rank pari passu with the existing shares in issue.
Purchase of own shares by the Company
A special resolution was passed on 2 December 2022 which authorised the Company in accordance
with The Companies (Guernsey) Law, 2008 to make purchases of its own shares as defined in that
Ordinance of its Participating Shares of 0.01p each, provided that –
a the maximum number of shares the Company can purchase is no more than 14.99% of the
Company’s issued share capital
b the minimum price (exclusive of expenses) which may be paid for a share is 0.01p, being the
nominal value per share
c the maximum price (exclusive of expenses) which may be paid for the share is an amount
equal to the higher of (i) 105% of the average of the middle market quotations for a share
taken from the LSE Daily Official List for the 5 business days immediately preceding the day
on which the Share is purchased and (ii) the price stipulated in Article 5(i) of the Buy-back
and Stabilisation Regulation (No 2237 of 2003)
d purchases may only be made pursuant to this authority if the shares are (at the date of the
proposed purchase) trading on the LSE at a discount to the lower of the undiluted or diluted
NAV
105
Ruffer Investment Company Limited
e the authority conferred shall expire at the conclusion of the Annual General Meeting of the
Company in 2023 or, if earlier, on the expiry of 15 months from the passing of this
resolution, unless such authority is renewed prior to such time and
f the Company may make a contract to purchase shares under the authority hereby conferred
prior to the expiry of such authority which will or may be executed wholly or partly after the
expiration of such authority and may make an acquisition of shares pursuant to any such
contract.
Redeemable participating preference shares in issue
As at 30 June 2023, the Company had 383,517,764 (30 June 2022: 323,002,764) redeemable
participating preference shares of 0.01p each in issue. Therefore, the total voting rights in the
Company at 30 June 2023 were 383,517,764 (30 June 2022: 323,002,764. Subsequent to the year
end, the Company has purchased into treasury 150,000 of its own shares at an average purchase
price of £2.6325.
14 NAV reconciliation
The Company announces its NAV, based on bid value, to the LSE after each weekly and month end
valuation point. At the time of releasing the year end NAV to the LSE, not all 30 June prices of the
Company’s investments may be available. Adjustments are made to the NAV in the Financial
Statements once these prices become available. The following is a reconciliation of the NAV and
NAV per share attributable to redeemable participating preference shareholders as presented in
these Financial Statements to the NAV and NAV per share reported to the LSE.
30 June 23 30 June 22
–––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––
NAV per NAV per
NAV £ share £ NAV £ share £
NAV published on the LSE as at the year end 1,096,014,803 2.8578 947,554,437 2.9336
Adjustments to valuations (3,974,468) (0.0104) 5,230,336 0.0162
Net assets attributable to holders of
redeemable participating preference shares 1,092,040,335 2.8474 952,784,773 2.9498
15 Contingent liabilities
There were no contingent liabilities as at 30 June 2023 (30 June 2022: £Nil).
106
107
Ruffer Investment Company Limited
16 Related party transactions
The Directors are responsible for the determination of the investment policy of the Company and
have overall responsibility for the Company’s activities, and are therefore regarded as related
parties.
Investment Management Agreement
The Company is managed by Ruffer AIFM Ltd, a subsidiary of Ruffer LLP, a privately owned
business registered in England and Wales as a limited liability partnership. The Company and the
Investment Manager have entered into an Investment Management Agreement under which the
Investment Manager has been given responsibility for the day-to-day discretionary management of
the Company’s assets (including uninvested cash) in accordance with the Company’s investment
objective and policy, subject to the overall supervision of the Directors and in accordance with the
investment restrictions in the Investment Management Agreement and the Articles.
The market value of LF Ruffer Gold is deducted from the NAV of the Company before the
calculation of management fees on a monthly basis, as the Investment Manager separately earns a
management fee from that entity. For additional information, refer to the Portfolio Statement on
pages 125 to 128. Management fees for the year and payable at the end of the year are disclosed in
note8.
Directors’ remuneration
Directors’ remuneration is set out in the Directors’ Remuneration Report on page 66 of the
Financial Statements.
Shares held by related parties
As at 30 June 2023, Directors of the Company held the following numbers of shares beneficially –
Shares 30 June 23 30 June 22
Christopher Russell 125,000 125,000
Susie Farnon 16,200 na
Shelagh Mason 14,698 14,698
Nicholas Pink 55,027 45,027
Solomon Soquar – na
David Staples* na 500,000
Jill May na 13,750
210,925 698,475
* Includes 250,000 shares beneficially owned by a party related to Mr Staples.
As at 30 June 2023, Duncan MacInnes, Investment Director of the Investment Manager owned
43,100 (30 June 2022: 43,100) shares in the Company. Mr MacInnes purchased a further 15,000
shares in the Company on 5 July 2023.
As at 30 June 2023, Jonathan Ruffer, chairman of Ruffer LLP (the parent entity of the Company’s
Investment Manager), owned 499,335 (30 June 2022: 499,335) shares in the Company.
As at 30 June 2023, Ruffer LLP and other entities within the Ruffer Group held 2,891,816
(30June 2022: 3,066,348) shares in the Company on behalf of its discretionary clients.
On 7 July 2023, Jasmine Yeo, Investment Manager of the Investment Manager, purchased
15,000shares in the Company.
Investments in related funds
As at 30 June 2023, the Company held investments in four (30 June 2022: four) related
investment funds valued at £211,696,123 (30 June 2022: £217,280,776). Refer to the Portfolio
Statement on pages 125 to 128 for details.
17 Operating segment reporting
The Chief Operating Decision Maker, which is the Board, is of the opinion that the Company is
engaged in a single segment of business in a single geographical area, Guernsey, being investment
in a portfolio of equity, equity-related and debt assets, in order to provide a return for
shareholders. The financial information used by the Chief Operating Decision Maker to manage
the Company presents the business as a single segment.
Segment information is measured on the same basis as that used in the preparation of the
Company’s Financial Statements.
The Company receives no revenues from external customers. The Company holds no non-current
assets in any geographical area other than Guernsey.
18 Financial instruments
In accordance with its investment objectives and policies, the Company holds financial
instruments which at any one time may comprise the following –
– securities held in accordance with the investment objectives and policies
– cash and short-term receivables and payables arising directly from operations
– derivative transactions including investment in forward foreign currency contracts and
– borrowing up to a maximum of 30% of the NAV of the Company.
108
109
Ruffer Investment Company Limited
Terms, conditions and accounting policies
The financial instruments held by the Company comprise principally internationally listed or
quoted equities or equity related securities (including convertibles), and/or bonds which are issued
by corporate issuers, supra-nationals or government organisations.
Details of the significant accounting policies and methods adopted, including the criteria for
recognition, the basis of measurement and the basis on which income and expenses are
recognised, in respect of its financial assets and liabilities are disclosed in note 2. The following
table analyses the carrying amounts of the financial assets and liabilities by category as defined in
IFRS 9.
The following are the categories of financial instruments held by the Company at the reporting
date.
30 June 23 30 June 22
fair value £ fair value £
Financial assets
Financial assets at fair value through profit or loss
Listed securities 987,853,777 806,498,698
Unlisted securities – –
UCITS funds 49,685,937 45,882,134
Derivative financial assets 3,497,285 989,682
Financial assets at amortised cost
Cash and cash equivalents 50,508,224 91,882,581
Trade and other receivables (excluding prepayments) 1,973,951 29,695,609
1,093,519,174 974,948,704
30 June 23 30 June 22
fair value £ fair value £
Financial liabilities
Financial liabilities at fair value through profit or loss
Derivative financial liabilities – 503,673
Financial liabilities at amortised cost
Trade and other payables 1,496,934 21,667,315
1,496,934 22,170,988
19 Financial risk management and associated risks
The Company is exposed to a variety of financial risks as a result of its activities. These risks
include market risk (including price risk, foreign currency risk and interest rate risk), credit risk
and liquidity risk. These risks, which have applied throughout the year and the Investment
Manager’s policies for managing them are summarised as follows:
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices. The Company’s activities expose it primarily to the
market risks of changes in market prices, interest rates and foreign currency exchange rates.
Market price risk
Market price risk arises mainly from the uncertainty about future prices of the financial
instruments held by the Company. It represents the potential loss the Company may suffer
through holding market positions in the face of price movements.
The Company’s investment portfolio is exposed to market price fluctuations which are monitored
by the Investment Manager in pursuance of the investment objectives and policies. Adherence to
investment guidelines and to investment and borrowing powers set out in the Placing and Offer for
Subscription document mitigates the risk of excessive exposure to any particular type of security or
issuer.
Market price sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to equity, investment
funds, commodities and bond price risks at the reporting date. The 20% reasonably possible price
movement for equity-related securities, investment funds and commodities (30 June 2022: 20%)
is based on the Investment Manager’s best estimates. The sensitivity rate for these investments of
20% is regarded as reasonable, as in the Investment Manager’s view there continues to be potential
for market volatility in the coming year.
A 20% (30 June 2022: 20%) increase in the market prices of equity- and commodity-related
investments as at 30 June 2023 would have increased the net assets attributable to holders of
redeemable participating preference shares by £53,009,374 (30 June 2022: £56,315,585) and a
20% change in the opposite direction would have decreased the net assets attributable to holders
of redeemable participating preference shares by an equal opposite amount.
110
111
Ruffer Investment Company Limited
This analysis does not allow for the impact of investments held within Ruffer Protection Strategies
or Ruffer Illiquid Multi-Strategies Fund 2015, which may reduce the sensitivity to market prices.
Please refer to the Derivatives section below.
A sensitivity analysis based on the interest rates of bond-related investments as at 30 June 2023
and 30 June 2022 has been considered under Interest rate risk on pages 113 to 116.
Actual trading results may differ from the above sensitivity analysis and these differences could be
material.
Foreign currency risk
Foreign currency risk arises from fluctuations in the value of a foreign currency. It represents the
potential loss the Company may suffer though holding foreign currency assets in the face of foreign
exchange movements.
As a portion of the Company’s investment portfolio is invested in securities denominated in
currencies other than pound sterling (the functional and presentation currency of the Company),
the Statement of Financial Position may be significantly affected by movements in the exchange
rates of such currencies against pound sterling. The Investment Manager has the power to manage
exposure to currency movements by using options, warrants and/or forward foreign currency
contracts and details of the holdings of such instruments at the date of these Financial Statements
is set out below and on the following page. In the event that the base currency weakens during the
course of the contract, the contract will expire at a loss that will be offset by a corresponding gain
in the underlying assets. The opposite would be true when the base currency strengthens during
the course of the contract.
As at 30 June 2023, the Company had two (30 June 2022: eight) open forward foreign currency
contracts.
Forward foreign exchange contracts at 30 June 2023
Notional amounts
of contracts Fair value
Expiry date Underlying outstanding assets £
15 Sept 2023 Foreign currency (sale of USD) US$447,491,642 3,489,331
15 Sept 2023 Foreign currency (sale of EUR) €28,458,375 7,954
3,497,285
112
Forward foreign exchange contracts at 30 June 2022
Notional amounts
of contracts Fair value
Expiry date Underlying outstanding assets/(liabilities) £
16 Sept 2022 Foreign currency (sale of USD) US$146,005,720 726,278
16 Sept 2022 Foreign currency (sale of USD) US$55,000,000 (284,261)
16 Sept 2022 Foreign currency (sale of USD) US$40,000,000 (71,845)
16 Sept 2022 Foreign currency (sale of USD) US$30,000,000 (137,510)
16 Sept 2022 Foreign currency (sale of USD) US$30,000,000 –
16 Sept 2022 Foreign currency (sale of EUR) €6,273,099 12,531
16 Sept 2022 Foreign currency (purchase of USD) US$30,740,233 250,873
16 Sept 2022 Foreign currency (purchase of EUR) €6,273,099 (10,057)
486,009
The Company’s treatment of currency transactions other than in pound sterling is set out in note 2
to the Financial Statements under ‘Translation of foreign currency.’
As at 30 June 2023 and 30 June 2022, the Company held the following assets and liabilities in
currencies other than the functional currency, excluding the impact of forward foreign exchange
contracts disclosed above.
30 June 23 30 June 23 30 June 22 30 June 22
assets £ liabilities £ assets £ liabilities £
Australian dollar 39,872,562 – 50,495,812 –
Euro 26,056,469 – 34,901,475 –
Canadian dollar 1,083,413 – – –
Yen 174,468,368 – 75,269,855 –
Swedish krone – – 4,062,345 –
Swiss franc – – 893,279 –
US dollar 399,321,189 – 237,701,191 20,625,044
Total 640,802,001 – 403,323,957 20,625,044
Foreign currency sensitivity
As at 30 June 2023, if foreign exchange rates had weakened 10% (30 June 2022: 10%) against
pound sterling with all other variables held constant, net assets attributable to holders of
113
Ruffer Investment Company Limited
redeemable participating preference shares would be £26,404,629 (30 June 2022: £16,080,712)
lower, net of open forward foreign currency contracts and due mainly as a result of foreign
currency losses on translation of these financial assets and liabilities to pound sterling; and a 10%
strengthening of foreign exchange rates against pound sterling would have resulted in an equal but
opposite effect on the net assets attributable to holders of redeemable participating preference
shares. The sensitivity rate of 10% is regarded as reasonable as this approximates to the weighted
average volatility over the last two years of the principal foreign currencies to which the Company
is exposed against Pound Sterling. Any changes in the foreign exchange rate will directly affect the
profit and loss, allocated to the capital column of the Statement of Comprehensive Income.
Actual trading results may differ from the above sensitivity analysis and these differences could be
material.
As has been seen in previous years currencies can fluctuate by more or less than this indicative
amount. The Investment Manager incorporates this variable into risk analysis when managing the
investments.
Interest rate risk
Interest rate risk represents the uncertainty of investment return due to changes in the market
rates of interest.
The Company invests in fixed and floating rate securities. The income of the Company may be
affected by changes to interest rates relevant to particular securities or as a result of the
Investment Manager being unable to secure similar returns on the expiry of contracts or sale of
securities. Interest receivable on bank deposits and floating rate securities or payable on bank
overdraft positions will be affected by fluctuations in interest rates (cash flow interest rate risk).
The Investment Manager actively manages the Company’s exposure to interest rate risk, paying
heed to prevailing interest rates and economic conditions, market expectations and their own
opinions of likely movements in interest rates. Currently the vast majority of the exposure of the
Company to fixed interest securities is in the form of index-linked bonds. The value of these
investments is determined by current and expected inflation and interest rates.
The value of fixed interest securities will be affected by general changes in interest rates that will in
turn result in increases or decreases in the market value of those instruments. When interest rates
decline, the value of the Company’s investments in fixed rate debt obligations can be expected to rise,
and when interest rates rise, the value of those investments may decline (fair value interest rate risk).
The investment portfolio details the security type, issuer, interest rate, and maturity date of all of
the Company’s fixed and floating rate securities as at 30 June 2023.
The following tables summarise the Company’s exposure to interest rate risk. It includes the
Company’s financial assets and liabilities at fair values, categorised by underlying interest rate type.
As at 30 June 2023
Non-interest
Floating rate £ Fixed rate £ bearing £ Total £
Financial assets
Investments at fair value through
profit or loss 110,065,207 473,752,470 453,722,037 1,037,539,714
Cash and cash equivalents 50,508,224 – – 50,508,224
Derivative financial assets – – 3,497,285 3,497,285
Trade and other receivables – – 1,973,951 1,973,951
160,573,431 473,752,470 459,193,273 1,093,519,174
Financial liabilities
Trade and other payables – – 1,496,934 1,496,934
– – 1,496,934 1,496,934
As at 30 June 2022
Non-interest
Floating rate £ Fixed rate £ bearing £ Total £
Financial assets
Investments at fair value through
profit or loss 69,930,912 279,155,729 503,294,191 852,380,832
Cash and cash equivalents 91,882,581 – – 91,882,581
Derivative financial assets – – 989,682 989,682
Trade and other receivables – – 29,695,609 29,695,609
161,813,493 279,155,729 533,979,482 974,948,704
Financial liabilities
Derivative financial liabilities – – 503,673 503,673
Trade and other payables – – 21,667,315 21,667,315
– – 22,170,988 22,170,988
114
The table below summarises weighted average effective (real) interest rates for fixed rate financial
instruments.
Weighted Weighted
average period average period
for which rate/ for which rate/
yield is fixed yield is fixed
30 June 23 % (years) 30 June 22 % (years)
UK government bonds 3.5591 29.60 -0.6526 23.11
US government bonds 4.3669 19.64 3.0709 1.20
US corporate bonds 18.2200 4.38 17.9583 4.38
Australian government bonds 4.3047 1.08 4.7100 0.75
Japanese government bonds -0.1406 0.92 -1.0928 4.70
Interest rate sensitivity analysis
Key determinants of interest rates include economic growth prospects, inflation, governments’
fiscal positions and rates on nominal bonds of similar maturities. This sensitivity analysis assumes
a 200 basis point increase or decrease in interest rates (30 June 2022: 100 basis point increase or
50 basis point decrease), with all other variables unchanged. This would be the equivalent of a
200basis point increase or decrease in ‘real’ interest rates, and as such is likely to overstate the
actual impact of such a move in nominal rates. The increased interest sensitivity rates in the
current year are regarded as reasonable due to the current high inflation environment.
As most of the Company’s fixed rate securities are index-linked bonds, their yields, and as a
consequence their prices, are determined by market perception as to the appropriate level of yields
given the economic background.
This analysis does not allow for the impact of investments held within Ruffer Protection Strategies
which may reduce the sensitivity to changes in interest rates. Please refer to the Derivatives section
below.
Fair value interest rate sensitivity
In respect of the Company’s holdings of fixed rate bonds, an increase/decrease of 200 basis points
in interest rates as at the reporting date would have decreased/increased the net assets attributable
to holders of redeemable participating preference shares by £124,862,317 (30 June 2022: an
increase of 100 basis points would have decreased the net assets attributable to holders of
redeemable participating preference shares by £36,018,623 and a decrease of 50 basis points
would have increased the net assets attributable to holders of redeemable participating preference
shares by £18,009,311).
115
Ruffer Investment Company Limited
Cash flow interest rate sensitivity
In respect of the Company’s holdings of floating rate bonds and cash and cash equivalents, an
increase/decrease of 200 basis points in interest rates as at the reporting date would have
increased/decreased the net assets attributable to holders of redeemable participating preference
shares by £3,211,469 (30 June 2022: an increase of 100 basis points would have increased net
assets attributable to holders of redeemable participating preference shares by £1,618,135 and a
decrease of 50 basis points would have decreased the net assets attributable to holders of
redeemable participating preference shares by £809,063).
Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a
commitment that it has entered into with the Company. Failure of any relevant counterparty to
perform its obligations in respect of these items may lead to a financial loss.
The Company is exposed to credit risk in respect of cash and cash equivalents and trade and other
receivables. The credit risk associated with debtors is limited to the unrealised gains on open
derivative contracts such as forward foreign currency contracts, as detailed above and trade and
other receivables. It is the opinion of the Board of Directors that the carrying amounts of these
financial assets represent the maximum credit risk exposure as at the reporting date.
The Company will not invest in the securities of any company that is not quoted or does not have a
listing on a market specified in the Financial Services and Markets Act 2000 (Financial
Promotions) Order 2001 except for investments in investment funds and such other financial
markets as may be specifically agreed from time to time between the Board and the Investment
Manager.
All transactions in listed securities are settled/paid upon delivery using approved brokers. The risk
of default is considered minimal, as delivery of securities sold is only made once the broker has
received payment. Payment is made on a purchase once the securities have been received by the
broker. The trade will fail if either party fails to meet their obligation. All amounts outstanding at
the year end on the purchases of securities were settled within a few days of the year end, therefore
there are no expected credit losses on these amounts.
The Company’s most recent prospectus, published on 15 December 2022, allows investment in a
wide universe of equity related securities and bonds, including those in countries that may be
classed as emerging or developing. In adhering to investment restrictions set out within the
document, the Company mitigates the risk of any significant concentration of credit risk.
116
117
Ruffer Investment Company Limited
Credit risk analysis
The Company’s maximum credit exposure is limited to the carrying amount of financial assets
recognised at the reporting date, as summarised below.
30 June 23 £ 30 June 22 £
Financial assets at fair value through profit or loss 1,037,539,714 852,380,832
Derivative assets at fair value through profit or loss 3,497,285 989,682
Cash and cash equivalents 50,508,224 91,882,581
Trade and other receivables 1,973,951 29,695,609
1,093,519,174 974,948,704
The Company is exposed to a potentially material credit risk in respect of cash and cash
equivalents, which is mitigated by the use of institutions with a high credit rating. As at 30 June
2023, almost 100% (30 June 2022: 58%) of cash is placed with Northern Trust (Guernsey) Limited
(NTGL), and the remainder with Royal Bank of Scotland International Limited (RBSI).
NTGL is a wholly owned subsidiary of The Northern Trust Corporation (TNTC). TNTC is publicly
traded and a constituent of the S&P 500. TNTC has a long-term credit rating of AA- (30 June
2022: AA-) from Standard & Poor’s and A2 (30 June 2022: A2) from Moody’s. RBSI has a
long-term credit rating of A (30 June 2022: A-) from Standard & Poor’s and A2 (30 June 2022:
A2) from Moody’s.
118
The Moody’s credit ratings of the issuers of Bonds held by the Company as at 30 June 2023 and
30June 2022 were as follows.
30 June 23 30 June 22
UK index-linked gilt 1.875% 22/11/2022 – Aa3
UK gilt 2.25% 07/09/2023 Aa3 –
UK gilt 0.75% 22/07/2023 Aa3 –
UK index-linked gilt 0.125% 22/03/2024 – Aa3
UK index-linked gilt 0.125% 22/03/2026 – Aa3
UK index-linked gilt 0.375% 22/03/2062 Aa3 Aa3
UK index-linked gilt 0.125% 22/11/2065 Aa3 Aa3
UK index-linked gilt 0.125% 22/03/2068 Aa3 Aa3
UK index-linked gilt 0.125% 22/03/2073 Aa3 Aa3
US Treasury inflation indexed bond 0.625% 15/04/2023 – Aa3
US Treasury inflation indexed bond 0.625% 15/01/2026 Aaa –
US Treasury inflation indexed bond 0.625% 15/02/2051 Aaa –
US Treasury inflation indexed bond 0.625% 15/02/2052 Aaa –
US Treasury inflation indexed bond 0.625% 15/02/2053 Aaa –
US Treasury floating rate bond 31/10/2023 – Aaa
US Treasury floating rate bond 31/01/2024 Aaa Aaa
US Treasury floating rate bond 31/10/2024 Aaa –
PFCLN 9.75% 15/11/2026 *BB– *BB–
Australia 5.75% 15/07/2022 – Aaa
Australia 2.25% 21/11/2022 – Aaa
Australia 5.5% 21/04/2023 – Aaa
Australia 2.75% 21/04/2024 Aaa Aaa
Australia 0.25% 21/11/2024 Aaa –
Japan 0.005% 01/04/2024 A1 –
Japan 0.005% 01/05/2024 A1 –
Japan 0.005% 01/06/2024 A1 –
Japan 0.005% 01/07/2024 A1 –
Japan 0.005% 01/08/2024 A1 –
Japan index-linked bond 0.10% 10/03/2026 – A1
Japan index-linked bond 0.10% 10/03/2027 – A1
Japan index-linked bond 0.10% 10/03/2028 – A1
* Standard & Poors rating
119
Ruffer Investment Company Limited
None of the Company’s financial assets is secured by collateral or other credit enhancements.
Derivatives
The Company has gained exposure to derivative contracts (predominantly options and forward
currency contracts) as a risk management tool. The intention of using such derivative contracts has
been primarily to minimise the exposure of the Company to the negative impact of changes to
foreign exchange rates, interest rates, market volatility and to protect the portfolio from a
correlated fall in bonds and equities. At the year end, all such instruments (except forward foreign
exchange contracts) were held indirectly within the Ruffer Protection Strategies International or
Ruffer Illiquid Multi-Strategies Fund 2015 vehicles as detailed in the Portfolio Statement on
page128.
Fair value
Financial assets at fair value through profit or loss are carried at fair value. Other assets and
liabilities are carried at cost which approximates fair value.
IFRS 13 requires the Company to classify a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. IFRS 13 establishes a fair value hierarchy that prioritises
the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three
levels of the fair value hierarchy under IFRS 13 are as follows –
Level 1: Quoted prices, based on bid prices, (unadjusted) in active markets for identical assets or
liabilities
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability either directly (that is, as prices) or indirectly (that is, derived from prices) and
Level 3: Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its
entirety is determined on the basis of the lowest level input that is significant to the fair value
measurement in its entirety. For this purpose, the significance of an input is assessed against the
fair value measurement in its entirety. If a fair value measurement uses observable inputs that
require significant adjustment based on unobservable inputs, that measurement is a Level 3
measurement. Assessing the significance of a particular input to the fair value measurement in its
entirety requires judgment, considering factors specific to the asset or liability.
120
The determination of what constitutes ‘observable’ requires significant judgment by the Company.
The Company considers observable data to be that market data that is readily available, regularly
distributed or updated, reliable and verifiable, not proprietary, and provided by independent
sources that are actively involved in the relevant market.
Assets classified in Level 1 consist of listed or quoted equities or equity related securities, options
and bonds which are issued by corporate issuers, supra-nationals or government organisations.
Assets classified in Level 2 are investments in funds fair-valued using the official NAV of each fund
as reported by each fund’s independent administrator at the reporting date. Where these funds are
invested in equity type products, they are classified as equity in the table above. Options and
foreign exchange forward contracts are fair valued using publicly available data. Foreign exchange
forward contracts are shown as derivative financial assets and liabilities in the above table.
Assets classified in Level 3 consist of investments for which no market exists for trading, for
example investments in liquidating or illiquid funds, and are reported using the latest available
official NAV less dividends declared to date of each fund as reported by each fund’s independent
administrator at the last reporting date. Where a market exists for trading in illiquid funds, these
are classified in Level 2.
The following table presents the Company’s financial assets and liabilities at fair value through
profit or loss by level within the valuation hierarchy at 30 June 2023.
30 June 23
Level 1 £ Level 2 £ Level 3 £ Total £
Financial assets at fair value through
profit or loss
Non-UK index-linked bonds 123,979,982 – – 123,979,982
Long-dated index-linked gilts 86,442,111 – – 86,442,111
Short-dated bonds 371,184,204 2,211,380 – 373,395,584
Protection strategies and derivatives – 162,010,186 – 162,010,186
Gold exposure and gold equities 26,664,983 28,201,683 – 54,866,666
Commodity exposure 88,467,875 – – 88,467,875
Equities 126,893,056 21,484,254 – 148,377,310
Derivative financial assets – 3,497,285 – 3,497,285
Total assets 823,632,211 217,404,788 – 1,041,036,999
Financial liabilities at fair value through
profit or loss
Derivative financial liabilities – – – –
Total liabilities – – – –
121
Ruffer Investment Company Limited
The following table presents the Company’s financial assets and liabilities at fair value through
profit or loss by level within the valuation hierarchy at 30 June 2022.
30 June 22
Level 1 £ Level 2 £ Level 3 £ Total £
Financial assets at fair value through
profit or loss
Non-UK index-linked bonds 58,562,473 – – 58,562,473
Long-dated index-linked gilts 83,617,453 – – 83,617,453
Short-dated index-linked gilts 84,948,751 – – 84,948,751
Short-dated bonds 121,957,964 – – 121,957,964
Protection strategies and derivatives – 171,398,642 – 171,398,642
Gold exposure and gold equities 53,835,441 23,966,709 – 77,802,150
Equities 221,209,427 21,915,425 – 243,124,852
Global funds 10,968,547 – – 10,968,547
Derivative financial assets – 989,682 – 989,682
Total assets 635,100,056 218,270,458 – 853,370,514
Financial liabilities at fair value through
profit or loss
Derivative financial liabilities – 503,673 – 503,673
Total liabilities – 503,673 – 503,673
The Company recognises transfers between levels of fair value hierarchy as of the end of the
reporting year during which the transfer has occurred. During the years ended 30 June 2023 and
30 June 2022, there were no transfers between levels of fair value hierarchy.
There were no movements in Level 3 investments during the year.
Liquidity risk
Liquidity risk is the risk that the Company will find it difficult or impossible to realise assets or
otherwise raising funds to meet financial commitments. The Company’s liquidity risk is managed
by the Investment Manager who monitors the cash positions on a regular basis. The Company’s
overall liquidity risks are monitored on a regular basis by the Board of Directors and a formal
report is made by the Investment Manager to the Directors at each Board Meeting.
122
As at 30 June 2023 and 30 June 2022, the Company had no significant financial liabilities other
than short-term payables arising directly from investing activity and derivative financial liabilities
used to minimise the Company’s foreign currency exposure.
20 Capital risk management
The fair value of the Company’s financial assets and liabilities approximate to their carrying
amounts at the reporting date. For the purposes of this disclosure, redeemable participating
preference shares are considered to be capital.
The Company’s objectives when managing capital are to safeguard the Company’s ability to
continue as a going concern and be viable in order to pursue its investment objectives. The Board
regularly reviews the Company’s capital structure, including gearing levels. It also decides the
extent to which any return of capital or income may be made to shareholders by way of dividends
or share repurchases. It is the Board’s intention to increase the market capitalisation of the
Company not only through capital gain on the portfolio but also through further issuance of shares
when demand permits and the shares are trading at a sufficient premium to NAV per share.
To assist with the marketing of the Company’s shares, the Company intends to operate in such a
manner that its shares are not categorised as non-mainstream pooled investments. This requires
the Company to act so that it would qualify as an investment trust if it were UK tax-resident.
Among other things, this requires the Company to pay dividends such that it retains no more than
15% of the income that it receives or is deemed to receive on an annual basis.
The Company has the ability to borrow up to 30% of its NAV at any time for short-term or
temporary purposes as is necessary for the settlement of transactions, to facilitate redemption
(where applicable) or to meet ongoing expenses. At the year end the Company had no borrowings
(30 June 2022: Nil). The Company does not have, nor does it intend to adopt, any structural
gearing. The gearing ratio below is calculated as total liabilities divided by total equity.
30 June 23 £ 30 June 22 £
Total assets 1,093,537,269 974,955,761
Less: total liabilities (1,496,934) (22,170,988)
Total equity 1,092,040,335 952,784,773
Gearing ratio 0.14% 2.33%
The Board considers this gearing ratio to be adequate since total liabilities, which relates only to
trade and other payables and unrealised losses on open forward foreign currency contracts,
represents a very small proportion of the Company’s total assets.
The Company has no externally imposed capital requirements.
Redemption facility
In addition to the Company having the authority to purchase shares when deemed appropriate by
the Directors, the Company has a Redemption Facility (which takes the form of a tender offer to all
holders of redeemable participating preference shares). This facility may operate annually, in
November each year, at the discretion of the Directors. Redemptions on any Redemption Date may
be restricted to a maximum of 25% in aggregate of the Shares then in issue, with any tender
requests from shareholders in excess of this being scaled back pro rata.
The facility is intended, together with share buybacks, to address any imbalance in the supply and
demand for the shares and to assist in maintaining a narrow discount to the NAV per Share at
which the shares may be trading.
Purchase of own shares by the Company
A special resolution was passed on 2 December 2022 which authorised the Company, in
accordance with The Companies (Guernsey) Law, 2008, to make purchases of its own shares as
defined in that Ordinance of its redeemable participating preference shares of 0.01p each,
provided that –
i the maximum number of shares the Company can purchase is no more than 14.99% of the
Company’s issued share capital
ii the minimum price (exclusive of expenses) which may be paid for a share is 0.01p, being the
nominal value per share
iii the maximum price (exclusive of expenses) which may be paid for the share is an amount
equal to the higher of (i) 105% of the average of the middle market quotations for a share
taken from the London Stock Exchange Daily Official List for the 5 business days
immediately preceding the day on which the Share is purchased and (ii) the price stipulated
in Article 5(i) of the Buy back and Stabilisation Regulation (No 2237 of 2003)
iv acquisitions may only be made pursuant to this authority if the shares are (at the date of the
proposed purchase) trading on the London Stock Exchange at a discount to the lower of the
undiluted or diluted NAV
123
Ruffer Investment Company Limited
v the authority conferred shall expire at the conclusion of the AGM of the Company in 2023
or, if earlier, on the expiry of 15 months from the passing of this resolution, unless such
authority is renewed prior to such time and
vi the Company may make a contract to purchase shares under the authority hereby conferred
prior to the expiry of such authority which will or may be executed wholly or partly after the
expiration of such authority and may make a purchase of Shares pursuant to any such
contract. No such repurchases of shares were made during the year (30 June 2022: Nil).
21 Subsequent events
These Financial Statements were approved for issuance by the Board on 3 October 2023.
Subsequent events have been evaluated up until this date.
Subsequent to the year end, the Company has purchased 150,000 of its own shares into treasury at
an average price of £2.6325 per share.
A second interim dividend of 1.65p per share in respect of the year ended 30 June 2023 was
declared on 4 October 2023. The dividend is payable on 27 October 2023 to shareholders on
record at 13October 2023.
124
125
Ruffer Investment Company Limited
Holding at % of total
Currency 30 June 23 Fair value £ net assets
Government bonds 53.28%
(30 Jun 22: 36.42%)
Non-UK index-linked bonds
US Treasury inflation indexed bond 0.625% 15/01/2026 USD 45,000,000 43,061,439 3.94
US Treasury inflation indexed bond 0.625% 15/02/2051 USD 26,467,000 16,109,479 1.48
US Treasury inflation indexed bond 0.625% 15/02/2052 USD 69,810,000 39,501,057 3.62
US Treasury inflation indexed bond 0.625% 15/02/2053 USD 32,523,000 25,308,007 2.32
Total non-UK index-linked bonds 123,979,982 11.36
Long-dated index-linked gilts
UK index-linked gilt 0.375% 22/03/2062 GBP 10,744,368 14,677,291 1.34
UK index-linked gilt 0.125% 22/11/2065 GBP 9,800,000 11,099,223 1.02
UK index-linked gilt 0.125% 22/03/2068 GBP 19,020,000 22,440,548 2.05
UK index-linked gilt 0.125% 22/03/2073 GBP 37,500,000 38,225,049 3.50
Total long-dated index-linked gilts 86,442,111 7.91
Short-dated bonds
Australia 0.25% 21/11/2024 AUD 36,200,000 17,982,361 1.65
Australia 2.75% 21/04/2024 AUD 42,000,000 21,769,089 1.99
UK gilt 2.25% 07/09/2023 GBP 24,000,000 23,867,280 2.19
UK gilt 0.75% 22/07/2023 GBP 23,152,000 23,097,361 2.12
Japan 0.005% 01/04/2024 JPY 6,379,450,000 34,863,578 3.19
Japan 0.005% 01/05/2024 JPY 6,378,900,000 34,861,268 3.19
Japan 0.005% 01/06/2024 JPY 6,379,450,000 34,866,363 3.19
Japan 0.005% 01/07/2024 JPY 6,380,300,000 34,871,706 3.19
Japan 0.005% 01/08/2024 JPY 6,391,900,000 34,939,991 3.20
US Treasury floating rate bond 31/10/2024 USD 69,862,000 55,027,255 5.05
US Treasury floating rate bond 31/01/2024 USD 69,923,800 55,037,952 5.05
Total short-dated bonds 371,184,204 34.01
Total government bonds 581,606,297 53.28
Corporate bonds 0.20%
(30 Jun 22: 0.22%)
PFCLN 9.75% 15/11/2026 USD 3,600,000 2,211,380 0.20
Total corporate bonds 2,211,380 0.20
Portfolio statement
as at 30 June 2023
126
Holding at % of total
Currency 30 June 23 Fair value £ net assets
Equities 13.57%
(30 Jun 22: 26.66%)
Europe
Arcelormittal EUR 144,081 3,086,654 0.28
Banco Santander EUR 410,000 1,192,442 0.11
Bank of Ireland EUR 341,790 2,566,435 0.25
Bayer EUR 113,200 4,929,944 0.45
Dassault Aviation EUR 12,600 1,985,770 0.18
Grifols EUR 35,480 357,940 0.03
Groupe Bruxelles Lambert EUR 24,100 1,494,420 0.14
Danone EUR 38,600 1,862,167 0.17
Hellenic Telecom EUR 43,650 589,652 0.05
JDE Peets EUR 66,690 1,561,086 0.14
Orange EUR 55,016 505,862 0.05
Prosegur Cash EUR 720,973 368,014 0.03
Vallourec EUR 250,541 2,326,283 0.21
Vivendi EUR 225,000 1,625,290 0.15
Volkswagen EUR 15,200 1,604,510 0.15
Total Europe equities 26,056,469 2.39
United Kingdom
Admiral Group GBP 89,675 1,866,137 0.17
Ashmore GBP 530,000 1,101,340 0.10
BAE Systems GBP 177,010 1,640,883 0.15
Balfour Beatty GBP 305,000 1,039,440 0.10
Beazley GBP 272,700 1,604,840 0.15
BP GBP 1,123,582 5,150,500 0.47
British American Tobacco GBP 19,527 509,167 0.05
Conduit GBP 274,000 1,263,140 0.12
Glencore GBP 691,356 3,073,077 0.28
Grit Real Estate GBP 3,743,544 1,123,063 0.10
GSK GBP 115,800 1,608,230 0.15
Haleon GBP 232,500 749,115 0.07
Hipgnosis Songs Fund GBP 5,000,000 3,980,000 0.36
Jet2 GBP 124,200 1,547,532 0.14
Man Group GBP 345,600 754,790 0.07
Marks & Spencer GBP 1,102,630 2,123,665 0.19
PRS REIT GBP 2,500,000 2,007,500 0.18
Holding at % of total
Currency 30 June 23 Fair value £ net assets
Reckitt Benckiser GBP 22,200 1,312,464 0.12
Renn Universal Growth Trust GBP 937,500 0 0.00
Rolls-Royce Holdings GBP 941,455 1,422,539 0.13
Ruffer SICAV UK Mid & Smaller Companies Fund* GBP 8,812,245 21,484,254 1.97
Science Group GBP 345,250 1,450,050 0.13
Taylor Maritime Investments GBP 4,515,000 3,386,250 0.31
Trident Royalties GBP 7,557,947 3,401,076 0.31
Tufton Oceanic Assets USD 2,562,500 1,976,895 0.18
Unilever GBP 50,000 2,048,750 0.19
Vodafone Group GBP 686,500 508,010 0.05
Whitbread GBP 27,000 914,220 0.08
Total UK equities 69,046,927 6.32
North America
Amazon USD 34,259 3,513,550 0.32
Bank of America USD 36,500 824,360 0.08
Cigna USD 16,533 3,650,848 0.33
Coty A USD 283,000 2,735,763 0.25
Exxon Mobil USD 15,800 1,333,479 0.12
General Electric USD 19,500 1,686,275 0.15
General Motors USD 54,000 1,638,747 0.15
GoDaddy A USD 22,285 1,318,013 0.12
Grifols ADR USD 66,561 478,916 0.04
Jackson Financial USD 103,525 2,493,793 0.23
M&T Bank USD 5,000 486,972 0.04
Meta Platforms USD 9,260 2,091,026 0.19
Noble USD 19,700 640,642 0.06
NOV USD 123,100 1,554,376 0.14
Pfizer USD 62,000 1,789,766 0.16
Pioneer Natural USD 20,000 3,260,647 0.30
PNC Financial USD 8,900 882,013 0.08
Ryanair ADR USD 32,900 2,864,473 0.26
Suncor Energy CAD 47,000 1,083,413 0.10
Synchrony USD 14,299 381,704 0.04
Total North America equities 34,708,776 3.16
127
Ruffer Investment Company Limited
128
Holding at % of total
Currency 30 June 23 Fair value £ net assets
Asia (ex-Japan)
Alibaba Group ADR USD 72,655 4,767,216 0.44
Taiwan Semiconductor Manufacturing USD 80,000 6,353,775 0.58
Weiss Korea GBP 800,000 1,400,000 0.13
Total Asia (ex-Japan) equities 12,520,991 1.15
Other equities
AMBEV SA USD 2,422,044 6,044,147 0.55
Total other equities 6,044,147 0.55
Total equities 148,377,310 13.57
Commodity exposure 8.10%
(30 Jun 22: 3.13%)
Wisdomtree Brent crude oil USD 1,812,000 61,935,795 5.67
Wisdomtree copper USD 773,502 20,313,333 1.86
Yellow Cake GBP 1,521,220 6,218,747 0.57
Total commodity exposure 88,467,875 8.10
Gold exposure and gold equities 5.02%
(30 Jun 22: 8.17%)
Ishares Physical Gold USD 907,624 26,664,983 2.44
LF Ruffer Gold Fund* GBP 11,158,837 28,201,683 2.58
Total gold exposure and gold equities 54,866,666 5.02
Protection strategies and derivatives 14.84%
(30 Jun 22: 17.99%)
Ruffer Illiquid Multi Strategies Fund 2015* GBP 110,392,473 88,621,863 8.12
Ruffer Protection Strategies* GBP 9,334,953 73,388,323 6.72
Total protection strategies and derivatives 162,010,186 14.84
Total investments 1,037,539,714 95.01
Cash and other net current assets 54,500,621 4.99
1,092,040,335 100.00
* Ruffer Protection Strategies International and Ruffer Illiquid Multi Strategies Fund 2015 Ltd are classed as related parties as they share the same Investment
Manager (Ruffer AIFM Limited) as the Company. LF Ruffer Gold Fund and Ruffer SICAV UK Mid and Smaller Companies Fund are also classed as related parties as
their investment manager (Ruffer LLP) is the parent of the Company’s Investment Manager.
Ruffer Investment Company Limited was incorporated in Guernsey as a company limited by
shares and as an authorised closed-ended investment company on 1 June 2004. The Company
launched on the London Stock Exchange on 8 July 2004, with a launch price of 100p per share and
an initial net asset value of 98p per share. The principal objective of the Company is to achieve a
positive total annual return, after all expenses, of at least twice the Bank of England base rate. The
Company invests predominantly in internationally listed or quoted equities or equity related
securities (including convertibles) and/or bonds which are issued by corporate issuers,
supra-nationals or government organisations.
The Company’s redeemable participating preference shares are listed on the London Stock
Exchange.
The Company reports its audited annual results each year for the year ended 30 June, and its
unaudited interim results for the six months ended 31 December. These Financial Statements were
authorised for issue on 3 October 2023 by the Directors.
The Investment Manager is authorised and regulated by the United Kingdom Financial Conduct
Authority as a full-scope Alternative Investment Fund Manager (AIFM). The Investment Manager
is entitled to an investment management fee payable to the AIFM monthly in arrears at a rate of
1% of the Net Asset Value per annum.
The Investment Manager and the Board intend to conduct the affairs of the Company so as to
ensure that it will not become tax resident in the United Kingdom. Accordingly, and provided that
the Company does not carry on a trade in the United Kingdom through a branch or agency situated
therein, the Company will not be subject to United Kingdom Corporation Tax or Income Tax.
The Company intends to be operated in such a manner that its shares are not categorised as
non-mainstream pooled investments. Among other things, this requires the Company to pay
dividends such that it retains no more than 15% of the income that it receives or is deemed to
receive for UK tax purposes on an annual basis.
Sanne Fund Services (Guernsey) Limited (formerly Praxis Fund Services Limited) (the
‘Administrator’) is entitled to receive an annual fee equal to 0.08%. per annum on the first
£100million; 0.04%. per annum between £100 million and £200 million; 0.02%. per annum
between £200 million and £300 million; and 0.015%. per annum thereafter; based on the NAV of
the Company on a mid-market basis, subject to a minimum fee of £100,000 per annum.
Northern Trust (Guernsey) Limited (the ‘Custodian’) is entitled to receive from the Company a fee
of £2,000 per annum. The Custodian is also entitled to charge for certain expenses incurred by it
in connection with its duties.
129
Ruffer Investment Company Limited
General information
Northern Trust (Guernsey) Limited (the ‘Depositary’) is entitled to an annual Depositary fee
payable monthly in arrears at a rate of 0.01% of the Net Asset Value of the Company up to
£100million, 0.008% on the next £100 million and 0.006% thereafter as at the last business day
of the month subject to a minimum fee of £20,000 per annum.
130
131
Ruffer Investment Company Limited
Directors
Christopher Russell
Shelagh Mason
Nicholas Pink
Susie Farnon (appointed 1 September 2022)
Solomon Soquar (appointed 2 December 2022)
Jill May (retired 2 December 2022)
David Staples (retired 2 December 2022)
Registered Office
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey GY1 2HL
Independent Auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
Guernsey GY1 3HW
Investment Manager and Alternative
Investment Fund Manager
Ruffer AIFM Limited
80 Victoria Street
London SW1E 5JL
Solicitors to the Company as to UK law
Gowling WLG
4 More London Riverside
London SE1 2AU
CREST Agent
Computershare Investor Services (Jersey)
Limited
Queensway House
Hilgrove Street
St Helier
Jersey JE1 1ES
Company Secretary and Administrator
Sanne Fund Services (Guernsey) Limited
(formerly Praxis Fund Services Limited)
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey GY1 2HL
Sponsor and broker
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Custodian
Northern Trust (Guernsey) Limited
Trafalgar Court, Les Banques
St Peter Port
Guernsey GY1 3DA
Depositary
Northern Trust (Guernsey) Limited
Trafalgar Court, Les Banques
St Peter Port
Guernsey GY1 3DA
Advocates to the Company as to Guernsey law
Mourant Ozannes (Guernsey) LLP
Royal Chambers
St Julian’s Avenue
St Peter Port
Guernsey GY1 4HP
Management and administration
Regulatory performance data
To 30 June % 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
RIC NAV TR 8.9 14.0 0.1 6.0 23.8 15.1 16.5 0.7 3.4 9.5 1.8
FTSE All-Share TR 12.3 22.0 16.8 5.3 -29.9 30.1 14.5 -3.5 12.3 20.8 1.2
Twice UK Bank Rate 9.9 9.4 11.0 11.2 3.4 1.0 1.0 1.0 1.0 1.0 1.0
FTSE All-World 13.6 13.6 15.2 16.5 -8.0 -13.2 23.8 21.7 -4.0 21.4 9.6
Bloomberg Global Agg -4.8 3.1 -5.7 -1.2 -0.1 3.4 3.4 -1.8 3.5 -1.7 1.9
2015 2016 2017 2018 2019 2020 2021 2022 2023 Annualised
-1.0 12.4 1.6 -6.0 8.4 13.5 11.4 3.0 -1.7 7.2
1.0 16.8 13.1 -9.5 19.2 -9.8 18.3 -4.6 7.9 7.0
1.0 1.0 0.5 1.0 1.5 0.5 0.2 0.7 6.5 3.2
10.2 14.0 23.0 9.4 10.1 5.7 25.0 -3.6 11.7 8.3
-0.3 4.1 -4.1 -2.1 3.5 2.2 -3.1 -11.4 -3.3 2.3
Source: Ruffer, Bloomberg, FTSE International (FTSE)†. Please note that 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.
The portfolio data displayed is designed only to provide summary information and the report does not explain the risks involved in investing in this product. Any
decision to invest must be based solely on the information contained in the prospectus and the latest report and accounts. The Key Information document is
provided in English and available on request or from ruffer.co.uk.
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.
132
Appendix (unaudited)
Alternative performance measures used in the Annual Report
Total NAV/Share price return
Total NAV return and total share price return are calculations showing how the NAV/share price
per share has performed over a period of time, taking into account dividends paid to shareholders.
It is calculated on the assumption that dividends are reinvested at the prevailing NAV/share price
on the last day of the month that the shares first trade ex-dividend. This provides a useful measure
to allow shareholders to compare performances between investment funds where the dividend
paid may differ.
Total NAV Total share
Year ended 30 June 23 return price return
Opening LSE NAV/share price per share 293.36p 300.00p
Closing LSE NAV/share price per share (a) 285.78p 276.00p
Dividends paid (b) 2.60p 2.60p
Weighted average LSE NAV/share price per share on
ex-dividend date (c) 300.89p 307.42p
Dividend adjustment factor (d = b/c + 1) (d) 1.0086 1.0085
Adjusted closing NAV/share price per share (e = a x d) (e) 288.25p 278.33p
Total NAV/share price return (1.7)% (7.2)%
Total NAV Total share
Year ended 30 June 22 return price return
Opening LSE NAV/share price per share* 281.32p 287.00p
Closing LSE NAV/share price per share* (a) 293.36p 300.00p
Dividends paid (b) 3.05p 3.05p
Weighted average LSE NAV/share price per share on ex-dividend date* (c) 291.53p 297.17p
Dividend adjustment factor (d = b/c + 1) (d) 1.0105 1.0103
Adjusted closing NAV/share price per share (e = a x d) (e) 296.43p 303.08p
Total NAV/share price return 5.4% 5.6%
* The prior year NAV return has been restated based on the Company’s NAVs published on the LSE rather than the IFRS NAVs, as this is consistent with the
information published by the Investment Manager during the year in its monthly factsheets.
133
Ruffer Investment Company Limited
Share premium/(discount) to NAV
Share premium or (discount) to NAV is the amount by which the share price is higher/lower than
the NAV per share, expressed as a percentage of the NAV per share, and provides a measure of the
Company’s share price relative to the NAV.
NAV per share
NAV per share is a calculation of the Company’s NAV divided by the number of shares in issue at
the NAV date and provides a measure of the value of each share in issue.
Market capitalisation
Market capitalisation is the value of a company that is traded on the stock market, calculated by
multiplying the total number of shares by the share price on the reference date.
134
Sterling Financial Print
176857