British multi-millionaire Jonathan Ruffer admitted his eponymous investment boutique "missed its client targets" for the second year running as cash returns were lower than expected.
Laffer, who co-founded Laffer Investment Management three decades ago, said in an annual review that the £20bn company's strategy would lag its cash benchmark in 2024 and 2023.
The philanthropist, who is also the firm's chairman, said the firm's approach to investing had been affected by the belief that U.S. stocks would fall and the yen would strengthen against the dollar, putting Rufer's fund in trouble.
The S&P 500 is up by more than a fifth in 2024, while Rufer's flagship Total Return fund returned 4.4% last year through the end of September, while the Bank of England rate was 5.25%, according to the firm.
“When the S&P was quite low, we got into a tailspin: it was wrong, but not abnormal — the nature of bubble valuations is that they somehow provide subconscious validation for a trip to the moon,” Rudd said. Fo said in an annual update.
"The yen continues to fall and exporters rise. If we put, say, 4% of our portfolio into these equity offsets, we could reap substantial gains on a regular basis... We don't do that because we're particularly concerned about equities as a The perils of an asset class.
"On its own, ignoring this error won't save our performance on a cash-plus-return basis, but it will help a lot."
His comments came after he received £89.8m in dividends from the firm to the end of March 2024, equivalent to around £2m for each of the 44 partners, down from £95m the previous year. Operating profit fell 14% for the year to £119m.
Rufer's flagship Total Return Fund aims to "provide consistent positive returns regardless of how financial markets perform." But the strategy returned negative 3.8% in 2023.
The fund boutique has been bearish on stocks, taking defensive positions in long-dated inflation-linked bonds while shorting growth stocks through short positions.
But Rufer said the company would retain its investment stance. “We continue to have skirmishes on the Cowhorn route; the assets we have selected have a sense that they have good days and bad weeks.
“It is no accident that we still have portfolios that can take advantage of a certain degree of systemic shock. Why can one say such a thing without arrogance? It correlates with price levels in major U.S. stock markets in three words: S&P The index is 6,000 points.”
Last year, the investment firm cut about 20 positions from its then-330-strong workforce, including those on its private client and risk teams.