Ruffer Investment Company (RICA) reported a positive return for the year ended 30 June 2026, as strong contributions from equities and precious metals outweighed the cost of maintaining portfolio protection in what the manager described as another year dominated by AI enthusiasm and geopolitical uncertainty.
The trust generated a NAV total return of 4.6% over the 12 months, while its share price total return was 5.5%.
Performance was led by the portfolio’s equity holdings, which contributed 4.6 percentage points, while exposure to gold and precious metals added a further 3.9 percentage points. Cash and short-dated bonds contributed 1.3 percentage points and commodities added 0.6 percentage points. Smaller positive contributions came from long and medium-dated nominal bonds, long-dated inflation-linked bonds and US dollar exposure.
These gains were partly offset by a 3.5 percentage point drag from credit and derivative strategies, reflecting the ongoing cost of downside protection, while yen exposure reduced returns by 2.0 percentage points.
The investment manager said the period was marked by broadening market leadership, geopolitical shocks and a renewed concentration in AI-linked equities. While those developments created opportunities, they also reinforced the need for portfolios capable of performing across a wide range of economic and market outcomes, it added.
Looking ahead, Ruffer believes markets are approaching an important inflection point centred on the sustainability of the AI investment cycle.
The manager said that if investors begin to question the returns generated by the vast amounts of AI-related capital expenditure, the result could be a disinflationary growth shock that would favour duration assets. Conversely, continued AI investment alongside further geopolitical disruption could produce overheating, higher inflation and a further erosion of the diversification benefits traditionally offered by government bonds.
Against this backdrop, Ruffer said it continues to balance participation in equity markets with significant defensive positioning.
The portfolio remains overweight areas where valuations are viewed as attractive and investor expectations remain subdued, including the UK, China and Japan. It also retains selective exposure to companies expected to benefit from AI resilience, adoption and the wider economic effects of the technology, while avoiding the market’s most crowded AI trades.
Alongside these growth opportunities, the trust continues to hold a range of protective assets, including credit and derivative strategies, yen exposure, selective duration positions, commodities, precious metals and real asset businesses. The manager believes these holdings should help preserve capital across a variety of scenarios, including an escalation in geopolitical tensions or a reversal in enthusiasm for AI-related investments.
Manager’s view
Commenting on the outlook, the investment manager said the portfolio is designed to remain resilient regardless of which macroeconomic scenario unfolds.
It said both a disinflationary slowdown driven by weaker AI investment returns and an inflationary environment fuelled by continued spending and geopolitical disruption remain credible outcomes. As a result, the trust continues to combine exposure to undervalued growth opportunities with both conventional and unconventional forms of portfolio protection, aiming to participate in rising markets while limiting downside risk should market leadership narrow or investor expectations begin to unwind.
The year-end review covers the 12 months to 30 June 2026 and provides shareholders with unaudited performance information ahead of the publication of the company’s audited annual results, which are expected before the end of October.
QuotedData’s view
QuotedData’s Richard Williams said: “Ruffer’s objective to deliver steady positive returns while preserving capital during periods of market stress inevitably means that its portfolio protection can weigh on performance when risk assets are rising, making its returns look modest compared with equity markets that continued to be driven by AI-related optimism.
“The question now is whether those defensive positions begin to earn their keep. Ruffer continues to argue that markets are vulnerable either to a reversal in AI enthusiasm or renewed inflationary pressure from geopolitical events. Whether or not either scenario materialises in the near term, the trust remains one of the more differentiated options for investors looking to diversify away from a conventional equity-heavy portfolio.”
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