For long‑term investors the question of what to hold and when to commit capital is rarely straightforward, but the current environment amplifies the challenge. Ruffer argues that we are now operating in a markedly different regime—one in which inflation is not only present but more volatile and elevated than what has been typical in recent decades. The firm suggests that 2022 marked the beginning of this era.
The triggers for this shift are multiple: geostrategic frictions, heightened defence and supply‑chain pressures, large and sustained government deficits, demographic trends that shrink the working‑age population in many advanced economies, and the costs of the energy transition and emerging technologies. In each case, the pressure is toward more persistent upward drift in prices, rather than a return to the gentle disinflation that many portfolios had been built on.
In the regimes where inflation is low and rising, or low and falling, the bond‑equity blend remains reasonable. But when inflation crosses the threshold into ‘high and falling’, or especially ‘high and rising’, the conventional portfolio begins to falter. Ruffer points out that in the ‘high and rising’ quadrant both bonds and equities suffer, and that assets such as commodities and precious metals historically provide useful protection in this environment.
Ruffer Investment Company Limited (LON:RICA) is a British investment company dedicated to investments in internationally listed or quoted equities or equity related securities
