The UK-investment firm has given a justification for its massive Bitcoin purchase in the Investment Manager’s Period End Review published yesterday. The review covers investment and fund allocation activity involving the company for the second half of last year.
Ruffer Investment is one of the major companies in the growing list of financial institutions flocking in the Bitcoin market. The firm is already invested in Bitcoin directly and has bought equities through other firms.
“We gained our bitcoin exposure via the Ruffer Multi Strategies Fund and two proxy equities in MicroStrategy and Galaxy Digital. At the period end, the combined exposure of these was just over 3%. In the short period since investing both stocks are up more than 100% and bitcoin is up 90%.”
The company revealed that its BTC acquisition move was part of a portfolio diversification play for a post-COVID economy. In the document, the company explained that the Bitcoin buy was unconventional but important.
“Our rationale has been well publicised but briefly, we have a history of using unconventional protections in our portfolio. This is another example, a small allocation to an idiosyncratic asset class which we think brings something significantly different to the portfolio.”
Ruffer also believes institutional adoption of the digital asset is burgeoning at the moment. The investment manager envisages more institutionalisation of the asset. Ruffer argued that many firms need a haven as the reduction of interest rates by the Federal Reserve has made holding cash unfeasible.
“Due to zero interest rates the investment world is desperate for new safe-havens and uncorrelated assets. We think we are relatively early to this, at the foothills of a long trend of institutional adoption and financialisation of bitcoin.”
Ruffer further detailed its 3% allocation was meagre albeit crucial citing the risk involved in the bitcoin buy as the reason for the small allocation.
“If we are wrong, bitcoin will return to the shadows and we will lose money – this explains why we have kept the position size small but meaningful,” the company wrote.
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