Drip-feeding
Lacking ambition
Edelsten says a fully hedged ( equal value long and short ) fund will only benefit from the net of the positions and so , unless exceptional stock selections are made , these will vary little over a year – “ maybe plus or minus 3 % after charges ”.
The manager warns these gains don ’ t look particularly attractive when they are below inflation , as they are now , and won ’ t hold any appeal if interest rates rise above 2 %, as they may do this year .
“ At least long-only equities have the potential to bring returns ahead of inflation when bull markets return ,” he says . “ That may be some time off , or it might be right now .”
MacInnes points out his Ruffer Investment Company has beaten the FTSE All Share since launch in 2004 , as has the LF Ruffer Equity & General fund since it was launched in 1999 .
“ You ’ ve had a smoother and a better journey ,” he says . “ Of course , the skill would have been in picking Ruffer back in the 1990s : you might have picked another fund that didn ’ t do as well .” years , they would have been up by just 38.3 %. Yet had they decided to drip-feed money in instead , at £ 100 a month , a total investment of £ 36,000 over the 30 years would have turned into £ 75,344.6 – a return of 110 %. Not bad considering you bore the brunt of one of the biggest bear markets in history . Assuming you invested the £ 36,000 in an asset making a compound return of 2.6 % at the start of this period , you would have ended up with £ 77,754.1 – only an extra £ 2,409.5 .
When the sun comes out But these are overly pessimistic scenarios – after all , markets tend to rise over the long term . So what about the best ? MacInnes says : “ I saw a great stat the other day saying that if you had invested £ 100 a month into the UK market when I was born in 1985 , you would have about £ 218,000 today . It is absolutely bananas . “ We do not contest the fact that equities are the best asset for the long term . The history and data are on your side .”
Issue 84 - May 2022 / 35 /