Ruffer Investment Company Limited (LON:RICA) has announced its Monthly Investment Report for August 2025:
The fund delivered another month of positive NAV performance in August, with gold mining equities the standout contributor. Strong free cash flow generation at higher gold prices gives us confidence the sector still offers attractive opportunities, despite a significant rally year to date.
We have long been proponents of gold and real assets, as we consider inflation to be the missing puzzle piece to solve governments’ problem of too much debt and not enough growth. Gold bullion had been struggling to regain its June highs after the 12 day Iran-Israel war, but it has now resumed its upward trajectory and posted a new record price on the final trading day of August. This is little surprise: central bank independence appears under threat, with President Donald Trump publicly berating Federal Reserve Chair Jerome Powell and attempting to dismiss Biden-appointed Governor Lisa Cook.
Another tailwind for gold has been the fresh focus on fiscal (un)sustainability. France faces another budgetary crisis. That has prompted Prime Minister François Bayrou to call a September vote of confidence, which is likely to result in further political uncertainty. France’s government borrowing costs are now much closer to Italy’s than Germany’s. Global sovereign bond yields rose in response to continued fiscal angst, and our long-dated inflation-linked bonds were a small drag on performance as a result.
In terms of macroeconomic developments, August began with a weak US jobs report, which revised down prior month readings. This fuelled fears of a looming US recession and led President Trump to oust the head of the Bureau for Labor Statistics. The market wobble was short-lived, and sentiment quickly recovered as Q2 GDP was revised higher, inflation data met expectations, and Powell suggested in his Jackson Hole speech that the balance of risks was shifting towards weaker employment. This gave markets licence to price in more supportive monetary policy.
Given that backdrop, equity markets remained resilient overall, but the AI theme lost momentum late in the month after Nvidia offered less bullish guidance than usual. This meant several non-US markets outperformed, mirroring the pattern at the start of the year. Our China-exposed and commodity-linked equities were bright spots, whilst derivative protection detracted from performance.
During the month, we took some profits in equities, with sales focused on top-performing names after the rally over the last four months. We also trimmed the allocation to gold miners but retain around a 6% weighting, reflecting our continued conviction in real assets for the more inflationary and volatile regime we believe began in 2020. We also took the opportunity, whilst volatility remains subdued, to bolster the derivative protection in the fund.
We don’t try to time the market. However, we believe it is prudent to increase the portfolio’s defensiveness when assets look expensive and political, policy and trade uncertainty is high. After the significant recovery from the April tariff shock, there are growing signs of exuberance, and markets are starting to look complacent again.
