On Tuesday (December 15), UK-based Ruffer Investment Company Limited (“Ruffer”) announced that in November, the managers of the “Ruffer Multi-Strategies Fund” reduced the fund’s exposure to gold in favor of Bitcoin.

Ruffer is a closed-ended investment company incorporated in Guernsey, an island in the English Channel. It was funded in 1994, and it has around 6,600 clients worldwide., “mainly individuals and families, pension funds and charities.” As of 30 November 2020, it had £20.3 billion (or roughly $26 billion) worth of assets under management (AUM).

According to a Portfolio Update notice published on the website of the London Stock Exchange (LSE), Ruffer says that despite the turmoil caused by the COVID-19 pandemic, its portfolio “has made strong progress” this year, with a net asset value (NAV) total return of 12.2% (as of December 8):

“In the spring and early summer, gold and the inflation-linked bonds performed well. More recently, the economically sensitive equities have reacted very positively to the success of the covid-19 vaccines, leading the portfolio higher.”

More interestingly, Ruffer says that last month the managers of its Multi-Strategies Fund made a defensive move, reducing the exposure to gold and adding exposure to Bitcoin, and that the size of this exposure is “currently equivalent to around 2.5% of the portfolio.” It should be noted that this refers to 2.5% of the portfolio of this particular fund.

Ruffer says adding exposure to Bitcoin gives the fund “a small but potent insurance policy against the continuing devaluation of the world’s major currencies.” It goes on to say that Bitcoin “diversifies the company’s (much larger) investments in gold and inflation-linked bonds, and acts as a hedge to some of the monetary and market risks that we see.”

Update 1 (at 17:25 UTC on December 16)

Around 13:31 UTC, journalist Zack Voell wrote in a report for Coindesk that a spokesperson for Ruffer Investment had clarified (via email) an important statement in the company’s portfolio update memo to shareholders.

More specifically, this person told Coindesk that the 2.5% figure mentioned in that memo was referring to the percentage of the firm’s AUM that represented Bitcoin exposure. In fact, he/she said that currently Ruffer’s Bitcoin exposure “totals around £550m, equivalent to around 2.7% of the firm’s assets under management.” At today’s GBP-USD exchange rate, this means that Ruffer’s Bitcoin’s exposure currently totals around $742 million. Of course, what we still do not know is what they mean by “exposure to Bitcoin.” They could have simply bought “physical Bitcoin”, but it is also possible that they have invested in Bitcoin futures/options.”

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