Ruffer Investment Company Limited (LON:RICA) says its investment approach is designed to preserve capital and deliver positive returns that are not closely tied to the direction of broader markets, a proposition the firm argues could appeal to stocks and shares ISA investors looking for diversification across market cycles.
Jasmine Yeo, fund manager at Ruffer, in a recent online podcast, said the firm’s philosophy has remained unchanged for more than 30 years and is centred on avoiding losses in absolute terms rather than outperforming a benchmark during falling markets. “When we say we don’t lose money, we’re not talking about those relative returns or versus a benchmark,” she said. “It is really talking about protecting investors in absolute terms.”
Yeo said this differs from a conventional benchmark-led approach, where a manager may still be judged to have done well even if investors suffer a material decline in capital. She said Ruffer’s objective is to protect investors during periods of market stress and reduce the drawdowns that can undermine long-term compounding.
The strategy, she said, can be used either as a diversifying allocation within a broader portfolio or as a larger central holding for investors whose main objective is capital preservation. According to Yeo, the fund has typically aimed to provide returns that are uncorrelated not only with equities but also with fixed income, an area she said has become less dependable as a source of protection in recent years.
Yeo acknowledged that a capital preservation strategy can appear subdued during strong bull markets, when fear of missing out can be acute. However, she argued that avoiding deep losses can support stronger long-term outcomes and make it easier for investors to stay invested. “Capital preservation, I think, if done successfully can be very powerful and deliver those even better potentially long-term returns,” she said.
Ruffer uses derivatives as part of its protection toolkit, which Yeo described as an important but costly form of insurance. She said the firm manages that cost by moving between different forms of protection rather than relying on one structure regardless of price, and by offsetting defensive positions with growth assets such as equities, commodities and precious metals. She pointed to 2022 as an example of that approach, saying the fund delivered a positive return even as both bonds and equities fell.
On asset allocation, Yeo said bonds are no longer the safe haven they once were and should now be treated more tactically. She said Ruffer holds a small allocation, less than 5%, in long-dated UK index-linked government bonds as part of its approach to inflation risk and what she described as a period of financial repression. She added that commodities and precious metals also have an important role in that environment.
Precious metals were a significant contributor to returns in 2025, with exposure peaking at around 10%, mainly through gold mining equities rather than bullion. Yeo said the firm has since reduced that position, but still retains a meaningful allocation, particularly in mid and small-cap gold mining stocks where it continues to see value. She acknowledged that such holdings may appear unusual within a defensive strategy, but said they sit within a broader portfolio designed to balance protection and growth.
Yeo also pointed to what she sees as a wider shift in global markets, arguing that many investors may be assuming that the conditions of the past few decades will continue unchanged. She said portfolios remain heavily exposed to the US despite changing narratives around technology leadership, fiscal policy and valuations. On artificial intelligence, she said Ruffer is not sceptical about the technology itself, but remains cautious about the valuations attached to parts of the market and the capital intensity now emerging within large technology companies.
