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CF RUFFER EUROPEAN FUND
Providing capital growth by investing in a diversified pan-European portfolio
Investment objective
MAY 2015
The fund aims to provide capital growth by investing in a diversified pan-European portfolio of predominantly equities, though fixed income securities may also be utilised if the Investment Manager believes
they will assist in meeting the overall objective of the fund.
ISSUE 148
Share price as at 29 May 2015
O accumulation
521.11p
C accumulation
525.46p
Percentage growth (O acc)
%
31 Mar 2014 – 31 Mar 2015
0.4
31 Mar 2013 – 31 Mar 2014
16.1
31 Mar 2012 – 31 Mar 2013
13.0
31 Mar 2011 – 31 Mar 2012
-2.7
31 Mar 2010 – 31 Mar 2011
13.1
Source: Ruffer LLP
IMA sector ranking
Position/No. of funds
1 year
124/132
3 years
41/117
24/104
Source: Lipper, Morningstar
%
O class C class
Ongoing Charges
Figure (OCF)
1.55
1.25
Annual
management charge
1.50
1.20
Yield
0.00
0.21
Investment adviser
ACD
Ruffer LLP
Capita Financial
Managers Limited
Depositary
BNY Mellon Trust &
Depositary (UK) Limited
Auditors
Grant Thornton UK LLP
Structure
550
450
350
250
150
50
2002
Source: Ruffer LLP
2003
Price p
2004
2005
2006
2007
2008
CF Ruffer European Fund O acc
2009
2010
2011
2012
2013
2014
STOXX Europe 600 TR rebased £
Monthly review
(Mixed investment 40–85% shares)
5 years
Performance since launch on 5 June 2002
Sub-fund of CF Ruffer
Investment Funds (OEIC)
UK domiciled UCITS
Eligible for ISAs
Ruffer performance is shown after
deduction of all fees and management
charges, and on the basis of income
being reinvested. Past performance is
not a guide to future performance. The
value of the shares and the income from
them can go down as well as up and you
may not get back the full amount
originally invested. The value of
overseas investments will be
influenced by the rate of exchange.
During May, the fund’s O accumulation shares
rose by 2.8%, from 507.15p to 521.11p. This
compares to a 2.1% increase in the STOXX
Europe 600 in euro terms and a 0.2% increase on
a comparable, sterling-adjusted basis. The fund’s
equity exposure was 79.9% at the end of May and
with close to zero percent in index put options,
this was all underlying ‘long’ equity exposure. At
the end of April, the headline figure was 79.8%,
with 0.2% in index put options.
Elsewhere in the fund, the index-linked bond and
gold bullion weighting remained steady at 13.4%
and 3.1% respectively. This left the balancing cash
position at 3.6%. Addressing currencies, the
fund’s euro exposure is fully hedged back into
sterling; hence the latter’s 73% weighting at
period end. In addition, the fund holds 12% in
Swiss francs, 10% in Swedish kronor, 2% in
Norwegian kroner and 3% in US dollars, the latter
a function of our gold bullion holding.
Despite a broadly flat market, the fund made
good progress in May driven by significant
contributions from 4d pharma and Avacta. Both
companies can be loosely classified as ‘biotech’
which is a sector where valuations, in our opinion,
often reflect more hope than reality. That alone
would normally put us off, but we will make an
exception if we come across a company involving
managers we know, with a business model we
understand, which is obviously mispriced. 4d
pharma and Avacta are cases in point. Whilst
there was little new news on 4d pharma, Avacta
announced a highly significant licensing
agreement with Moderna Therapeutics.
Avacta is a global provider of proprietary
diagnostic tools, consumables and reagents for
life sciences and healthcare. The key driver of
value creation is its proprietary reagent platform,
affimers, which are an engineered alterative to
antibodies with technical and commercial
benefits: for example they are quicker to develop,
smaller and better able to bind to specific targets
and do not involve the use of animals. Affimers
have the potential to be a substitute for
antibodies which is a $50bn market.
We were introduced to Avacta in 2013 by a
shareholder we knew well and trusted. We
undertook extensive due diligence including
speaking to industry experts: it became
apparent that affimers was a unique technology
which alone could be worth considerably more
than Avacta’s then £32m enterprise value.
Indeed, at the time Avacta had two legacy
divisions whose earnings substantially
underpinned that valuation; in effect we were
able to buy a low/zero cost option on the
successful commercialisation of affimers. This is
exactly the kind of attractive risk-reward payoff
we like and so Avacta became one of our few
biotech investments.
It is encouraging that Avacta has signed its first
licensing deal shortly after the commercial launch
of affimers. The deal involves Moderna (a US
biotech company) licensing certain affimers for
use in the development of therapeutics; they
made an upfront payment of $0.5m, will purchase
custom affimers, make multi-million milestone
payments and ultimately pay royalties on any
successful launch. Following the announcement
we increased our weighting in Avacta.
Away from the excitement of affimers, markets in
May felt eerily calm. Most European equity
indices peaked in April before falling back as
bond yields rose from record lows; investors it
seems finally questioning what had become the
consensus trade of the year. On the periphery the
Greek tragedy played on with no sign of
agreement between Greece’s creditors, let alone
with Greece itself. Whilst markets shrugged off
the continuing impasse, it looks like June will be
the crunch month. Perhaps 2015 will bring a
whole new meaning to the adage ‘sell in May and
go away’. We ended the month increasing our
put protection on major European indices.
The fund’s prospectus and key investor information documents are provided in English and available on request or from www.ruffer.co.uk.
Issued by Ruffer LLP, 80 Victoria Street, London SW1E 5JL. Ruffer LLP is authorised and regulated by the Financial Conduct Authority. © Ruffer LLP 2015
Portfolio structure of CF Ruffer European Fund as at 29 May 2015
Ten largest holdings as at 29 May 2015
Finland
equities
3%
UK indexlinked gilts
14%
France
equities
8%
Stock
Gold and
gold equities
3%
Germany
equities
17%
Cash
4%
Norway
equities
2%
Spain
equities
1%
UK
equities
27%
Sweden
equities
9%
Switzerland
equities
12%
UK Treasury index-linked 1.25% 2017
9.0
Aurelius
6.2
IP Group
4.9
4d pharma
4.4
UK Treasury index-linked 0.125% 2019
4.4
Loomis
4.2
Earthport
3.5
ORPEA
3.5
Gold Bullion Securities
3.1
Comet
3.0
Source: Ruffer LLP
Source: Ruffer LLP
Asset allocation
Fund information
100%
Fund size
90%
No. of holdings
80%
Minimum investment
70%
Dealing
60%
£284.9m (29 May 2015)
59 equities, 2 bonds (29 May 2015)
£1,000
Weekly forward to 10am Wednesday,
based on NAV
Plus forward from 10am
on last Wednesday of the month
to last business day of the month
50%
40%
Dealing line
30%
ISIN
20%
10%
Equities
Bonds
Cash
Q3 14
Q4 13
Q1 13
Q2 12
Q3 11
Q4 10
Q1 10
Q2 09
Q3 08
Q4 07
Q1 07
Q2 06
Q3 05
Q4 04
Q1 04
Q2 03
SEDOL
Q3 02
0%
% of fund
Other
Ex dividend dates
Pay dates
Charges
TIMOTHY YOUNGMAN Investment Director (Europe)
Moved into European equity research in 1985, after a period with
McKinsey & Co and at Manchester Business School. He moved
from Savory Milln to SG Warburg in 1988, and then to an
independent research boutique in 1999, before joining Ruffer in
2003. He co-manages the CF Ruffer European Fund.
GUY THORNEWILL Investment Director
Began at Threadneedle Investments in 1996 on the US equity desk and
as a fund manager. After four years in Paris at Jefferies International as
a pan-European stock-picking analyst on the sell side, returned to
London in 2007 to work for AllianceBernstein, researching European
mid-cap companies. A CFA charterholder, he joined Ruffer in 2009 and
co-manages the CF Ruffer European Fund.
0845 601 9610
O class GB0031678161
C class GB00B84JVJ48
O class 3167816
C class B84JVJ4
15 March, 15 September
15 May, 15 November
Initial charge 5%
Annual management charge
O class 1.5%, C class 1.2%
Enquiries
Ruffer LLP
80 Victoria Street
London SW1E 5JL
Tel +44 (0)20 7963 8254
Fax +44 (0)20 7963 8175
[email protected]
www.ruffer.co.uk
Ruffer
The Ruffer Group manages investments on a discretionary
basis for private clients, trusts, charities and pension funds.
As at 31 May 2015, assets managed by the group exceeded
£18.8bn, of which over £9.0bn was managed in open-ended
Ruffer funds.
Issued by Ruffer LLP, 80 Victoria Street, London SW1E 5JL. Ruffer LLP is authorised and regulated by the Financial Conduct Authority. © Ruffer LLP 2015