Doceo Results round up

The Results Round-Up: The week’s investment trust results

Only two companies in this week’s round-up: global fund Bankers (BNKR) and capital preservation trust Ruffer (RICA). Unsurprisingly, of the two BNKR, the standout in performance terms with NAV total return up +21.1% for the year. By contrast RICA’s NAV total return for the 12 months to 31 December 2024 came in exactly flat, a 0.0% return for the year, now that’s an achievement in its own right.

By Frank Buhagiar

Bankers (BNKR) cautiously optimistic

BNKR’s full-year net asset value (NAV) total return came in at an impressive-looking +21.1%. Share price equivalent fared even better, up +21.4%. Both however could not quite match the FTSE World Index’s total return of +26.1%. But, as Chair Simon Miller points out, “It is worth noting that only a few investment funds have outperformed our global benchmark index this year.” That’s down to market returns being dominated by those Magnificent Seven and their flying share prices which powered a +30.3% increase in the US market in sterling terms during the year, around double the return from European and Japanese stocks. Stock selection in the US and an underweight exposure to the US market cited as reasons for the shortfall when compared to the benchmark. Steps have been taken to address the US underweight – BNKR’s exposure to US equities had been increased to 50% by year end from 40% previously and currently stands at 60%. “We hope to see improved performance relative to the benchmark next year as a result of these changes” says Miller.

And that’s not the only reason why Miller is optimistic for the year ahead “I have cautious optimism about the future. The prospect for further interest rate cuts on the back of lower inflation gives credence to the view that this year’s performance will not be given up next year. The new administration in the US appears focused on growth and reform, which will be welcomed by many businesses there.” So “Provided the economic outlook prevails, Bankers is in strong position to take advantage of a broadening out in markets.” Shares were up a cautiously optimistic 1.2p to 122p on the day of the results.

Numis: “The shares have been trading in double-digit (discount) territory in recent months (currently c.9%) and given the market backdrop of activism we would expect buybacks to be active to seek to prevent any widening of the discount.”

JPMorgan: “Bankers of today benefits from an attractive combination of low costs, long term low cost fixed rate debt and trades at a slightly wider than average discount in its peer group with the board making significant buybacks. But we think an improvement in the relative NAV performance is the one factor that is likely to see a sustained narrowing of the discount. We remain Neutral.”

Ruffer (RICA) keeping hold of its protective armoury

RICA’s investment managers gave the market their usual heads up on the fund’s performance outside of the formal financial results calendar: over the six-month period to end of December, NAV total return came in at -0.4%; share price total return +0.2%. That means NAV total return for the 12 months to 31 December 2024 was 0.0%, while share price total return was -0.7%. Longer-term performance reads better: the annualised NAV total return since inception in 2004 stands at +6.7% while total return since inception is +276.6%. For comparison, the FTSE All-Share has generated an annualised total return of +7.3%. But, as the investment managers write, “There is no denying we are at a painful moment for Ruffer and our shareholders. After four strong years from 2019 to 2022 when the NAV total return annualised over 10%, investors have now experienced two consecutive losses in share price terms. So where have we gone wrong?”

The investment managers put the performance down to “tension between the cyclical and the structural. On the cyclical, we have been proved wrong – there was no recession, but there was an aggressive disinflation and a resurgence in animal spirits. On the structural? Sticky inflation, financial stability preferred to monetary stability, geopolitical fracturing, the rise of populism and state directed capitalism – so far, spot on.” According to the managers, it’s a question of timing “We view this as an intertemporal snag. We currently see the elastic band which tethers prices and fundamentals as stretched taut, with the potential for an aggressive snap back.” And if that happens “a redemptive performance moment” can be expected. As the managers point out “We have been in this uncomfortable position before. We do not attempt to time every market turn, but we do seek to ensure the portfolio’s protective armoury is in place when we sense moments of danger”. Shares added 1.5p on the day to 271.5p – investors wanting exposure to that protective armoury too, it seems.

Numis: “Ruffer IC is managed by Duncan MacInnes and Jasmine Yeo with a capital preservation mind-set. The fund has a strong long term track record of delivering consistent growth with low volatility. The nature of the portfolio means that the NAV will inevitably lag if equity markets remain strong, but we believe that the fund can be regarded as an attractive portfolio diversifier as Ruffer has a record of insulating against market falls, most notably during 2022, Covid-19 and the global financial crisis.”