Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error

Ruffer
Aminatidi
Posted: 01 April 2018 11:30:01(UTC)
#1

Joined: 29/01/2018(UTC)
Posts: 169

Thanks: 276 times
Was thanked: 72 time(s) in 43 post(s)
I'm looking at putting together a small holding outside of my ISA.

I'd like to be more cautious with it than I am the holding inside the ISA wrapper so once again I've been looking at a small allocation towards preservation.

Of the usual suspects PNL are simply too expensive for a regular investment which is how I think I would contribute to this.

CGT are an option but I also took a look at Ruffer and it appears I'd be better off with NS&I (which I will also be doing with some of my cash).

What am I missing?
King Lodos
Posted: 01 April 2018 11:57:35(UTC)
#2

Joined: 05/01/2016(UTC)
Posts: 2,767

Thanks: 606 times
Was thanked: 4231 time(s) in 1641 post(s)
Ruffer's long-term record is great:

https://www.ruffer.co.uk/cmsfiles/reports/RTRF/2018/2018-02-RTRF-monthly-report-Feb2018.pdf

Over 200% since 2000, doubling the FTSE All Share, very consistent.

What they represent is a sensible, long-term macro view .. But whether they can repeat their success in this environment really comes down to what happens next .. My slightly pessimistic view is that there aren't any obvious hiding places in these markets – which makes me favour cash (NS&I bonds) and quality stocks.

Ruffer's more a bet on inflation and value stocks .. Normally those would be the smart bets at this stage in the cycle .. Whether this market cycle is anything like past ones is the question.


3 users thanked King Lodos for this post.
Aminatidi on 01/04/2018(UTC), Tim D on 02/04/2018(UTC), Peter59 on 13/04/2018(UTC)
Aminatidi
Posted: 01 April 2018 12:01:06(UTC)
#3

Joined: 29/01/2018(UTC)
Posts: 169

Thanks: 276 times
Was thanked: 72 time(s) in 43 post(s)
Yes as you say their long term return is good but it's as if "something" hit them a few years back.

I'm not well versed enough to know what that "something" was and whether actually they did exactly what their remit is in that environment, or if they got something "wrong"?
Alan Selwood
Posted: 01 April 2018 12:19:57(UTC)
#4

Joined: 17/12/2011(UTC)
Posts: 2,674

Thanks: 538 times
Was thanked: 4355 time(s) in 1591 post(s)
Quite a few funds went for 'Value' and then discovered that the rest of the investing public still went for 'Growth'.

Those who went for 'Growth' have so far achieved better results.

What happens next is, as always, unknown.

No doubt 'Value' will have its day. (But when?)
1 user thanked Alan Selwood for this post.
Aminatidi on 01/04/2018(UTC)
King Lodos
Posted: 01 April 2018 13:38:50(UTC)
#5

Joined: 05/01/2016(UTC)
Posts: 2,767

Thanks: 606 times
Was thanked: 4231 time(s) in 1641 post(s)
That's it.

The thing with Ruffer is they're not trying to time these things .. So their approach is to sit tight with the right portfolio, knowing the market will eventually catch up.

Their central thesis is that with global debt where it is, the world has to achieve inflation (inflation being a way to deal with debt, by reducing the value of the currencies it's denominated in) .. And that's why they hold: inflation-linked bonds, gold and cyclical stocks.

So what happens when inflation goes up? The price of oil and materials go up (good for energy/mining stocks); interest rates go up to counter the inflation (good for banks); etc. all in all, good for value stocks, which is why value often outperforms in the later stages of a market cycle .. The later stages being defined by rising inflation, leading to rising rates, tightening, and eventually recession.

So they've got the portfolio you'd want in the later stages of a market cycle .. The big question mark – and the only reason I'm not invested exactly the same way – is whether we get inflation .. The rise of automation and AI may keep things like wage growth, which is an aspect of inflation, down .. So the other view is more the view of Baillie Gifford: that technology makes investing in the 21st century a fundamentally different prospect – maybe a new industrial revolution, and a huge boost to productivity .. In the past, that bet has been wrong .. Markets certainly seem to think it's 'different this time' .. I think until we start to see a real uptick in inflation, we'll maintain this view .. Quality stocks and cash seems like the neutral position to me .. I'd be very nervous about a big bet on either value or tech giants (growth) right now
7 users thanked King Lodos for this post.
Aminatidi on 01/04/2018(UTC), Balvenie on 01/04/2018(UTC), Eddy on 02/04/2018(UTC), Tim D on 02/04/2018(UTC), novicetrader on 03/04/2018(UTC), DGL on 04/04/2018(UTC), Peter59 on 13/04/2018(UTC)
Keith Cobby
Posted: 01 April 2018 13:48:40(UTC)
#8

Joined: 07/03/2012(UTC)
Posts: 530

Thanks: 334 times
Was thanked: 833 time(s) in 336 post(s)
I take the BG view and have committed two thirds of funds to growth since the financial crisis. It has obviously paid off. Ruffer (and PNL) are perma-bears and I cannot see any circumstances in which this will change. I want to make money from equities and Ruffer will not achieve this. The alternative, as KL says, is cash.
5 users thanked Keith Cobby for this post.
Aminatidi on 01/04/2018(UTC), King Lodos on 01/04/2018(UTC), Martin53 on 01/04/2018(UTC), Balvenie on 01/04/2018(UTC), dlp6666 on 13/04/2018(UTC)
Aminatidi
Posted: 01 April 2018 14:00:50(UTC)
#9

Joined: 29/01/2018(UTC)
Posts: 169

Thanks: 276 times
Was thanked: 72 time(s) in 43 post(s)
Well, for now cash is not the problem, knowing what to do with it is!

I keep coming back to quality and find myself wondering why, if I'm holding Lindsell Train Global, Fundsmith and Buffettology in my ISA I wouldn't also put them in a monthly fed non ISA portfolio too.

I think my issue is a psychological one frankly in that I'm sat on £150k in literal cash yet when I'm looking at dripping in money I still find myself thinking "Hmm let's look at being a bit defensive" when I need to get past that and see that the way I can be defensive is by being sat on spare cash that I can use whenever I feel I can use it better.
King Lodos
Posted: 01 April 2018 14:14:09(UTC)
#13

Joined: 05/01/2016(UTC)
Posts: 2,767

Thanks: 606 times
Was thanked: 4231 time(s) in 1641 post(s)
The simple thing I'd do in this market is maintain an appropriate exposure to risk, and hold enough cash to a) preserve the wealth you've got; and b) give you the opportunity to buy stocks at better prices if opportunities present.

And I think 50:50 is a good default .. If you're still earning and saving a lot, you can go much more aggressive; but if it's a lump sum – I wouldn't tell someone who just won the lottery to go 100% stocks right now .. I'd probably never go more than 75:25 myself, because bad 20-30 year periods in stocks aren't all that rare, and cash (allowing you to buy when things fall) is the best way out of those
2 users thanked King Lodos for this post.
Aminatidi on 01/04/2018(UTC), Guest on 02/04/2018(UTC)
Alan Selwood
Posted: 01 April 2018 15:48:15(UTC)
#10

Joined: 17/12/2011(UTC)
Posts: 2,674

Thanks: 538 times
Was thanked: 4355 time(s) in 1591 post(s)
Aminatidi;59947 wrote:
Well, for now cash is not the problem, knowing what to do with it is!



Give it to me!

This will relieve you of any future fears of loss of what you have.
4 users thanked Alan Selwood for this post.
Aminatidi on 01/04/2018(UTC), Keith Cobby on 01/04/2018(UTC), Sara G on 01/04/2018(UTC), dlp6666 on 13/04/2018(UTC)
Alan Selwood
Posted: 01 April 2018 16:09:04(UTC)
#11

Joined: 17/12/2011(UTC)
Posts: 2,674

Thanks: 538 times
Was thanked: 4355 time(s) in 1591 post(s)
Aminatidi;59947 wrote:


.... I keep coming back to quality and find myself wondering why, if I'm holding Lindsell Train Global, Fundsmith and Buffettology in my ISA I wouldn't also put them in a monthly fed non ISA portfolio too.

I think my issue is a psychological one frankly in that I'm sat on £150k in literal cash yet when I'm looking at dripping in money I still find myself thinking "Hmm let's look at being a bit defensive" when I need to get past that and see that the way I can be defensive is by being sat on spare cash that I can use whenever I feel I can use it better.


Start at the beginning.

How much you have now.
How much you need to have (adjusted for inflation).
When you need to have it.

How much risk you need to take to achieve your inflation-adjusted objective.

Then,
How to reduce risk within reasonable bounds over the life of your accumulation of wealth by diversification (without going to extremes out of fear)

You may well find that whatever has worked for Foreign & Colonial over 150 years is as accurate as you will get without a crystal ball.

What did they do? (In general terms)
Emphasised fixed-interest investments in the early days when these were more favoured than equities.
Moved more into eqities when these started to become in vogue.
Tried to choose profitable investments at reasonable prices.
Weeded out any unexpected rubbish and obsolete sectors.
Replaced with profitable investments.
Repeated until further notice.

They currently emphasise equities including private equity plus cash.

There is no need to over-spread your holdings if you get the main allocation right or fairly right.
So you may do perfectly well with 10 profitable UK equities only, or 2 funds that are unlike each other or a 4-way equal spread of UK equities with overseas equities + bonds + cash + gold.

No portfolio allocation is necessarily better than any other. Everything is risk v reward, fashion v ignoring fashion.
A broad-brush approach has as much chance of getting good results as micro-managing every last 0.01% of the portfolio.


7 users thanked Alan Selwood for this post.
Luca Brasi on 01/04/2018(UTC), Sara G on 01/04/2018(UTC), Aminatidi on 01/04/2018(UTC), Guest on 02/04/2018(UTC), Tim D on 02/04/2018(UTC), novicetrader on 03/04/2018(UTC), dlp6666 on 13/04/2018(UTC)
Balvenie
Posted: 01 April 2018 17:53:56(UTC)
#6

Joined: 03/01/2018(UTC)
Posts: 19

Thanks: 26 times
Was thanked: 18 time(s) in 8 post(s)
King Lodos;59944 wrote:

So the other view is more the view of Baillie Gifford: that technology makes investing in the 21st century a fundamentally different prospect – maybe a new industrial revolution, and a huge boost to productivity .. In the past, that bet has been wrong .. Markets certainly seem to think it's 'different this time' ..


KL, without being patronising you're a sharp cookie.

The 4th Industrial revolution has apparently started but in it's infancy. Industry 4.0 / Industrial Internet of Things (IIOT). I was at a presentation a few months ago & it's quite incredulous some of the current technological advances that's not too far away. Basically the next evolutionary step in technology.

These things tend to creep up on us gradually.

A very simple example someone gave me last week. home printer cartridges can be automatically reordered & paid for. The printer knows when the ink is low, triggers an order from the printer manufacturer, a BACS transfer then automatically pays for it. The final stage of delivery is still conventional I.e. Courier or postman. Perhaps a drone will drop it off one day ?

The hard bit is trying to figure out which companies will prosper in Industry 4.0 / IIOT.
4 users thanked Balvenie for this post.
Aminatidi on 01/04/2018(UTC), Sara G on 01/04/2018(UTC), King Lodos on 01/04/2018(UTC), dlp6666 on 13/04/2018(UTC)
Sara G
Posted: 01 April 2018 19:06:57(UTC)
#7

Joined: 07/05/2015(UTC)
Posts: 616

Thanks: 1126 times
Was thanked: 1146 time(s) in 421 post(s)
Balvenie;59956 wrote:
King Lodos;59944 wrote:

So the other view is more the view of Baillie Gifford: that technology makes investing in the 21st century a fundamentally different prospect – maybe a new industrial revolution, and a huge boost to productivity .. In the past, that bet has been wrong .. Markets certainly seem to think it's 'different this time' ..


KL, without being patronising you're a sharp cookie.

The 4th Industrial revolution has apparently started but in it's infancy. Industry 4.0 / Industrial Internet of Things (IIOT). I was at a presentation a few months ago & it's quite incredulous some of the current technological advances that's not too far away. Basically the next evolutionary step in technology.

These things tend to creep up on us gradually.

A very simple example someone gave me last week. home printer cartridges can be automatically reordered & paid for. The printer knows when the ink is low, triggers an order from the printer manufacturer, a BACS transfer then automatically pays for it. The final stage of delivery is still conventional I.e. Courier or postman. Perhaps a drone will drop it off one day ?

The hard bit is trying to figure out which companies will prosper in Industry 4.0 / IIOT.


I'm looking at Microsoft... the stock has defensive qualities currently, but according to news reports they are making great strides in quantum computing, which I think will be a real game changer. They've been playing catch-up behind the likes of IBM until recently but a recent breakthrough could see them winning the race in the next 5 years... So one for both Ruffer and Baillie Gifford perhaps?


3 users thanked Sara G for this post.
King Lodos on 01/04/2018(UTC), Aminatidi on 01/04/2018(UTC), Balvenie on 01/04/2018(UTC)
King Lodos
Posted: 01 April 2018 20:13:35(UTC)
#14

Joined: 05/01/2016(UTC)
Posts: 2,767

Thanks: 606 times
Was thanked: 4231 time(s) in 1641 post(s)
Well there may be some good examples to the contrary – but: has it ever been a good idea to invest in revolutions?

– One of the big revolutions of the 20th century was commercial aviation – completely changed how we work, where we live, how wide our worlds are .. and yet as most of us know: the industry as a whole hasn't made a penny;

– In the 80s it was chip manufacturers (revolution in personal computing), and broadband in the 90s – and again, these were both bubbles, and Tech's still the worst performing sector since the 60s;

If we take the archetypal SMT holding: Amazon .. for me, this is the most worrying business of all .. It crushed the retail sector; turned the high street into a barren desert .. And yet it doesn't make money .. Amazon's business model largely involves stopping anyone else make money.


And Capitalism's always striving for "perfect competition" .. Great for consumers; terrible for investors .. And with AI, this could turn every business into a war of super-intelligence, running much closer to optimum efficiency .. And this is why I keep coming back to Buffett and Munger, and finding those rare businesses that don't suffer this fate (if there still are any once AI's attacking everything .. one of my most worrying developments is that I buy Aldi brand Gin now)
4 users thanked King Lodos for this post.
Aminatidi on 01/04/2018(UTC), Balvenie on 01/04/2018(UTC), Tim D on 02/04/2018(UTC), Sara G on 02/04/2018(UTC)
Aminatidi
Posted: 01 April 2018 20:16:17(UTC)
#17

Joined: 29/01/2018(UTC)
Posts: 169

Thanks: 276 times
Was thanked: 72 time(s) in 43 post(s)
Whilst I've got some in SMT for the tech stuff and accept it's volatility because of what it is, for the purposes of this pot of money my logic is that Amazon and god knows who can battle it out over who delivers toothpaste and how.

People will always need toothpaste though and someone has to make it.
2 users thanked Aminatidi for this post.
Balvenie on 01/04/2018(UTC), dlp6666 on 13/04/2018(UTC)
Balvenie
Posted: 01 April 2018 20:49:50(UTC)
#15

Joined: 03/01/2018(UTC)
Posts: 19

Thanks: 26 times
Was thanked: 18 time(s) in 8 post(s)
King Lodos;59962 wrote:
one of my most worrying developments is that I buy Aldi brand Gin now)


Nothing to worry about & I guess it's pretty good ? Why ? Because it's probably a premium UK gin branded Aldi, but you don't know which one. I was in a bottling hall recently when the exact same Caribbean rum was being filled into 4 different branded bottles. Same happens with whisky, vodka, gin, & most other spirits.

I hold some BG funds that include Amazon & agree it's worrying particularly with the Trump situation ?
King Lodos
Posted: 01 April 2018 21:11:07(UTC)
#16

Joined: 05/01/2016(UTC)
Posts: 2,767

Thanks: 606 times
Was thanked: 4231 time(s) in 1641 post(s)
Balvenie;59965 wrote:
KL,

Nothing to worry about as I guess it's pretty good ? Why ? Because it's probably a premium UK gin branded Aldi, but you don't know which one. I was in a bottling hall recently when the exact same Caribbean rum was being filled into 4 different branded labels.


It actually won a competition

Aldi's £10 gin declared one of the best in the world
https://www.independent.co.uk/life-style/food-and-drink/aldi-gin-best-world-spirit-10-cost-cheap-international-wine-spirits-competitions-awards-a7864211.html

Another bit of brand disloyalty I've had recently is that I'm using Google Sheets (free, cloud-based spreadsheet) rather than Microsoft Excel (which I've been using since I was at school), and that happened quite gradually.

And the reason those two things unnerve me is because if that happened to everything (which might be more likely with AI designing and even personalising products), everything we use might become either uninvestable (like Aldi) or unprofitable.

So central to my investing today is to look carefully at what I still pay an inefficient price for – e.g. Apple products and Marmite.

To an extent it's the same thing happening to jobs: if your cloud service has an AI that can write software and answer phones for you, you don't need to employ programmers or secretaries anymore – and if Microsoft, Amazon and Apple are all competing to offer the same cloud services, they might go the way of the airlines
3 users thanked King Lodos for this post.
Jon Snow on 01/04/2018(UTC), Tim D on 02/04/2018(UTC), Sara G on 02/04/2018(UTC)
Mr Helpful
Posted: 02 April 2018 09:00:02(UTC)
#12

Joined: 04/11/2016(UTC)
Posts: 591

Thanks: 669 times
Was thanked: 783 time(s) in 370 post(s)
Aminatidi;59947 wrote:
Well, for now cash is not the problem, knowing what to do with it is!
I think my issue is a psychological one frankly in that I'm sat on £150k in literal cash yet when I'm looking at dripping in money I still find myself thinking "Hmm let's look at being a bit defensive" when I need to get past that and see that the way I can be defensive is by being sat on spare cash that I can use whenever I feel I can use it better.

Ruffer is supposedly a one-stop shop?
How do the underlying holdings seem?
Do they fit the remit?
Perhaps more 'balanced' than 'defensive'?
Might certain assets be less than optimal in a rising interest rate environment?

As regards 'defensives' we presently hold :-
+ Bonds Short-Term IG (US unheged and UK)
+ A few other Debt funds
+ Commercial Property and Ground Rents
+ Renewables
+ Infrastructure
+ Adequate Cash
This may not end well, but takes direct control of Asset Classes.
No one to blame but ourselves.
1 user thanked Mr Helpful for this post.
Tim D on 02/04/2018(UTC)
Alan Selwood
Posted: 02 April 2018 10:50:28(UTC)
#18

Joined: 17/12/2011(UTC)
Posts: 2,674

Thanks: 538 times
Was thanked: 4355 time(s) in 1591 post(s)
The most daunting aspect of Quantum Computing in that article was the fact that if QC really works, it will be possible to crack encrypted information millions of times faster than now. So the level of encryption that is currently uncrackable in 10,000 years might be taken apart in hours or minutes. What would that do for data protection, military planning, security of bank accounts, etc? An alarming thought! We would presumably have to go back to paper and ink for our private information, and hold the paperwork in a folder that was closed and out of sight of any CCTV cameras.
4 users thanked Alan Selwood for this post.
Sara G on 02/04/2018(UTC), Tim D on 02/04/2018(UTC), dlp6666 on 13/04/2018(UTC), Margaret D on 13/04/2018(UTC)
King Lodos
Posted: 02 April 2018 11:53:21(UTC)
#20

Joined: 05/01/2016(UTC)
Posts: 2,767

Thanks: 606 times
Was thanked: 4231 time(s) in 1641 post(s)
There's a whole field of quantum encryption too, apparently .. I think the Chinese may have already used it with satellite images .. There's also the prospect to send information that knows when it's being read (by the quantum observation phenomenon – collapsing the wave packet).

I've got to admit the skeptic in me will only be convinced there's anything in quantum computing when we've done something previously impossible with it .. I'm a utilitarian with things like this.

Not many people in physics like to challenge the status quo, but I understand there are classical explanations for many of the most famous q-physics experiments, like Bell's inequality .. There's also a need to keep physics departments open, and chase ideas down rabbit hole a bit
Tim D
Posted: 02 April 2018 15:27:01(UTC)
#19

Joined: 07/06/2017(UTC)
Posts: 414

Thanks: 1497 times
Was thanked: 634 time(s) in 274 post(s)
Alan Selwood;59976 wrote:
The most daunting aspect of Quantum Computing in that article was the fact that if QC really works, it will be possible to crack encrypted information millions of times faster than now. So the level of encryption that is currently uncrackable in 10,000 years might be taken apart in hours or minutes. What would that do for data protection, military planning, security of bank accounts, etc? An alarming thought! We would presumably have to go back to paper and ink for our private information, and hold the paperwork in a folder that was closed and out of sight of any CCTV cameras.


More likely it'd prompt a massive tech upgrade cycle as the world rotated to quantum encryption technology. As KL's post mentions, this has been demonstrated already (which makes it considerably more real than still nascent quantum computing)... more details at https://www.technologyre...nce-between-continents/ . Expect disruption and opportunities if/when it happens...
1 user thanked Tim D for this post.
Sara G on 02/04/2018(UTC)
2 Pages12Next page
+ Reply to discussion

Markets

Other markets