• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to secondary sidebar
  • Skip to footer
  • Subscribe
  • Twitter
  • RSS Feed

Investment News NZ

Investment News provides financial advisers news stories from the financial industry in New Zealand. Subscribe to our free weekly newsletter.

  • Home
  • News
  • Kiwisaver
  • Subscribe
  • About
  • Advertise
  • Contact
You are here: Home / Investment News / Bitcoin: the nonsensical asset that makes sense for the times

Bitcoin: the nonsensical asset that makes sense for the times

January 17, 2021

Jonathan Ruffer: founder Ruffer LLP

When a 25-year-old English fund manager with £21 billion (A$37 billion) under management discloses it had made a sizable investment in bitcoin, it is bound to give the institutionalisation of the crypto currency a big kickalong.

This is especially so when the manager regards bitcoin as a potential store of wealth and not an alternative to a day at the races. Ruffer LLP, a privately held partnership, is now making its all-weather style of investing widely available in Australia through the launch of an unlisted unit trust, to be distributed by third-party marketer Shed Enterprises. The trust has been seeded by an Australian investor.

Jonathan Ruffer, founder and chairman, wrote to clients early this month, following its December announcement of a £550 million ($A970 million) investment in bitcoin that the best of a “smattering” of responses was a two-worder – ‘Happy Christmas’.

“That seems about right for an initial investment equivalent to around 2.5 per cent of the portfolio,” he said. “Our underlying reasoning is that bitcoin is becoming a challenger to gold’s standing as the one supra-currency, the thing to own when fiat currencies are kerplunked. We have done much work on assessing the danger that bitcoin is a wrong’un. We have been watching it for a longish time, and our judgement is that it is a unique beast as an emerging store of value, blending some of the benefits of technology and gold. Yes, it is a seemingly non-sensical asset – but one that makes absolute sense for how we see the world.

“The question that followed was: ‘when to make the move?’ A journey from pirate to president is a continuum, but an investment is a binary event – you either make it, or you don’t. We took the view that last November was not too soon, and if we left it any longer, subsequent price performance might make it feel too late. So, we made an allocation. At the time of writing, the entry price looks to have been favourable, but that’s not really the point. We are in the business of keeping clients safe, and we are nervously satisfied that bitcoin has a small part to play in the pudding.”

Ruffer sees its overriding goal is to “deliver consistent positive returns, whatever happens in the financial markets”. The firm says: “Our pre-occupation is with not losing money, rather than charging headlong for growth. It’s by putting safety first that we have made good money for our clients. Through boom and bust. For nearly 25 years. If we keep doing our job well, we will protect our clients’ capital – and increase its real value substantially.”

It is mostly described as a contrarian investor, but the firm says that this is not completely true. It is undoubtedly a long-term one though. At a client webinar last week (January 13) investment directors Alex Lennard and Duncan MacInnes pointed out that the bitcoin holding was still less than the allocation to gold, which has been a staple of the Ruffer style as a store of wealth and anti-inflation cushion.

Duncan MacInnes said that the firm has set itself up in preparation for a likely surge in inflation. “Credit protections (such as credit default swaps and alternatives) are a key uncorrelated protection for us going forward,” he said. “We also have cyclical equities, which are geared into the economic recovery that will benefit from the market’s broadening to value stocks… [US] Inflation only has to rise to 2.5 per cent for bonds and stocks to be positively correlated. I think most investment managers are unprepared for this.”

Alex Lennard said: “Coronavirus was the only thing that mattered in 2020.” Investors’ response to the volatility had the hallmark of an inwardly focused industry, mostly interested in relative returns, he said. “Much of that we have been talking about for the past 12 months is starting to play out. We are strongly of the view that investors should be prepared for a regime change in markets which is now well underway.”

Perpetual is the RE for the trust and Mainstream the administrator and custodian (with core custody contracted to one of the major custodian banks).

 

 

Greg Bright is publisher of Investor Strategy News (Australia)

Print Friendly, PDF & Email
Twitter0
LinkedIn0
Google+0
Facebook0

Read More » Investment News

Recent articles

  • Chief exits Kiwi Wealth; Mosaic names ASB ops expert as partner; T Rowe Price keeps Australasia wholesale role in the family February 28, 2021
  • Revenge against the ombudspeople: complaints body zombie legal action walks on February 28, 2021
  • Simplicity into top 10 ESG fund share for Australasia… February 28, 2021
  • … as Milford, Hyperion top Morningstar awards February 28, 2021
  • Tough calls ahead for local fixed income managers February 28, 2021
  • Boutique buoyancy management: how Ark stays afloat with more on board February 28, 2021
  • Master trusts surpass $8bn ahead of AMP passive rebirth February 28, 2021
  • T+1 and counting: why US trading systems could reach unsettling speeds February 28, 2021
  • Nature calls: under-construction financial disclosure framework to go beyond climate February 28, 2021
Finished reading? Why not subscribe? To receive a weekly email enter your email address here.

Primary Sidebar

WEEKLY NEWSLETTER

Sign up here to receive our weekly newsletter.
Learn More »

Investment News

  • Chief exits Kiwi Wealth; Mosaic names ASB ops expert as partner; T Rowe Price keeps Australasia wholesale role in the family February 28, 2021
  • Revenge against the ombudspeople: complaints body zombie legal action walks on February 28, 2021
  • Simplicity into top 10 ESG fund share for Australasia… February 28, 2021
  • … as Milford, Hyperion top Morningstar awards February 28, 2021
  • Tough calls ahead for local fixed income managers February 28, 2021
  • Boutique buoyancy management: how Ark stays afloat with more on board February 28, 2021
  • Master trusts surpass $8bn ahead of AMP passive rebirth February 28, 2021
  • T+1 and counting: why US trading systems could reach unsettling speeds February 28, 2021
  • Nature calls: under-construction financial disclosure framework to go beyond climate February 28, 2021
  • Front-to-back outsourcing transforms funds management February 28, 2021

Search by Keyword

Most Recent Investment News

Chief exits Kiwi Wealth; Mosaic names ASB ops expert as partner; T Rowe Price keeps Australasia wholesale role in the family

February 28, 2021

Revenge against the ombudspeople: complaints body zombie legal action walks on

February 28, 2021

Simplicity into top 10 ESG fund share for Australasia…

February 28, 2021

… as Milford, Hyperion top Morningstar awards

February 28, 2021

Tough calls ahead for local fixed income managers

February 28, 2021

Investment News Archive

Most Popular Articles

  • NZ share-trading splurge could trigger tax alarms… posted on October 5, 2020
  • Westpac NZ flags retail advice sale to Forsyth Barr posted on October 19, 2020
  • Flint set to spark platform competition posted on August 17, 2020
  • The horror year in technicolour: free KiwiSaver 13 report released posted on September 30, 2020
  • Four to the core: Smartshares to expand, rearrange and reprice ETFs posted on June 22, 2020
  • Kitset KiwiSaver scheme set to unwrap in spring posted on April 27, 2020
  • NZ Funds directors back on board posted on April 24, 2016
  • Funds eye bargains, self-shoppers hoard cash, KiwiSavers turn conservative posted on March 15, 2020

Sponosored Content

David-Boyle

Jumping lessons: what all investors can learn from GameStop loss

What do ‘Kiwi’ experts see for 2021?

David-Boyle

On the industry play-list: four chart-topping regulations for 2021

David-Boyle

Charge of the lite (advice) brigade

Quick-links to Popular News

  • FAP Compliance
  • Coronavirus
  • New Appointments
  • Financial Markets Authority (FMA)
  • Kiwisaver
  • Climate Change
  • Crypto Currency
  • Blockchain
  • Insurance

Secondary Sidebar

Recent News

  • Chief exits Kiwi Wealth; Mosaic names ASB ops expert as partner; T Rowe Price keeps Australasia wholesale role in the family February 28, 2021
  • Revenge against the ombudspeople: complaints body zombie legal action walks on February 28, 2021
  • Simplicity into top 10 ESG fund share for Australasia… February 28, 2021
  • … as Milford, Hyperion top Morningstar awards February 28, 2021
  • Tough calls ahead for local fixed income managers February 28, 2021
  • Boutique buoyancy management: how Ark stays afloat with more on board February 28, 2021
  • Master trusts surpass $8bn ahead of AMP passive rebirth February 28, 2021
  • T+1 and counting: why US trading systems could reach unsettling speeds February 28, 2021
  • Nature calls: under-construction financial disclosure framework to go beyond climate February 28, 2021
  • Front-to-back outsourcing transforms funds management February 28, 2021

Footer

Copyright ©2020 InvestmentNews.co.nz — All Rights Reserved ·— Terms & Conditions