Ruffer Investment Company has increased its exposure to China, arguing that markets may be overlooking a broader group of companies that could benefit from artificial intelligence.
In its annual review for the year to 30 June, the £861 million trust said the case for continued US market dominance is weakening. Its managers believe the shift towards a more multipolar global system could reduce the share of international capital flowing into US assets.
Ruffer remains positive on the near-term impact of AI on earnings and economic growth, but it sees a clear timing risk. Productivity gains may take longer to appear than current valuations assume. If earnings expectations remain too high, asset prices could be repriced before those benefits are fully realised.
The trust also believes the market is too focused on US infrastructure providers and the largest technology companies. In its view, AI value creation is likely to spread across a wider range of businesses involved in applications, distribution and commercialisation.
That view has supported a higher allocation to Asia excluding Japan. The weighting rose from 2.5% to 3.9% over the year. Ruffer’s holdings in the region include Alibaba, NetEase and Trip.com.
The UK and North America remain the trust’s largest regional equity exposures, at 10.2% and 8.5% respectively. Even so, the increase in Asian holdings shows a willingness to shift capital towards markets where valuations are lower and expectations are less demanding.
Ruffer Investment Company Limited (LON:RICA) is a British investment company dedicated to investments in internationally listed or quoted equities or equity related securities
