Fund Boutique Lafar is always proud to make investments that go against the flock.
However, that paradoxical attitude has led investors to provide such low returns over the past two years, and perform better even with cash.
At the heart of Laffer’s paper was the confidence that all powerful US stock markets were supported by the crash.
That call – something that is still in conflict with the views of 70% of fund managers in Bank of America’s latest survey – turns out to be wrong.
The US has been running wild, but is shunning the recession, and the rapid rates in 2022 and 2023 aim to suffocate it. Despite concerns about bubble-up tech valuations, the US stock market is resilient.
In 2023, Ruffer’s Retull Return Fund lost 6.3% as the S&P 500 generated revenue of over 20%. The Ruffer Fund, following its performance, fell 1.8% the following year.
The company’s chairman and co-founder Jonathan Laffer, a multi-millionaire philanthropist, has asserted that the company’s bearish investment strategy will be proven.
“It’s no coincidence that there is still a portfolio that can make the most of some degree of system shock,” he said in his January investment review.
But the problem is that Laffer sells himself as an “absolute return” fund.
Founded in 1994 by Ruffer, Robert Shirley, 14th Earl Ferrers and now Chair of the ICG Enterprise Trust, Jane Tufnell, the company has gained a reputation for being a well service and operates around £19.5 billion on nine funds, including flagship £1.7bn total revenue products.
Jonathan Ruffer, co-founder of Ruffer, donated tens of millions to revive parts of Durham County ©Alex Ramsay/Alamy
Its aim is to maintain investors’ money and beat cash returns even during periods of market turbulence. Even if Laffer’s US view is wrong, his investment strategy should still produce positive results.
In a year when Laffer’s total return fund lost 6.3% and 1.8%, the Bank of England’s base rate averaged 4.7% and 5.1%, respectively.
Lafar’s long record proves his ability to survive a financial storm.
The company solidified its reputation as a wealth reporter when the dot-com bubble burst at the turn of the millennium, which returned 16.8% in 2000.
Lafar delivered 16% during the global financial crisis in 2008 and 16.7% in 2020 during the community pandemic. Since 1995, the year after Ruffer’s founding, its main strategy has resulted in an average of 8% per year after fees.
However, due to weaker performance recently, investors and advisors questioning whether Laffer lost his glow despite the optimism of his co-founders.
“Luffer has established himself as a boutique for discerning investors.
“But as ‘super bears’ they had a very tough two years. They received a top-down macroeconomic call that the US economy is wrong. ”
The macroeconomic call will be made by Henry Maxey, who became Chief Investment Officer in 2010, and Neil McLeash, who was appointed co-chief Investment Officer in 2023.
They set up an investment process. This is one of the results of a gradual change apart from the trio of boutique co-founders since 2010, with fund managers expected to implement in minor variations across the company’s funds.
Ruffer expects high inflation and more volatile interest rates, so its funds hold significant positions in gold and long-term inflationary coalition bonds as protection. More than one-tenth of the total return funds are held in cash. Derivatives containing credit default swaps are used as another form of protection.
However, its defensive positioning has not succeeded in protecting the company from losses. The company’s trustworthy Ruffer Investment Company said in its annual report that 2023 was the “worst” in Ruffer’s history.
Caranish fund manager Peter Sleep said he “sees a flat performance before” because he supported Laffer when he worked in seven investment management, but “2023 was unexpectedly poor given his disclosed holdings of cash, short-term debt and equity.”
Some investors vote on their own feet. Seven investment management, which manages £27 billion, told Financial Times it withdraws £1.1 million that it invested in Ruffer Total Return.
“We believe there are multiple internal and external factors that have made it an increasingly challenging environment for Rafa and ultimately led to them missing out on their important objectives,” said Asim Kadri, 7 investment manager.
Lafar’s difficulties go beyond degradation in performance.
The group has cut a tenth of the workforce, which has reached more than 30 roles over the past two years. He said this was the result of the company’s decision to “prioritize investments in clients’ needs and prioritize growth ambitions in the UK and internationally.”
Ruffer has cut almost a tenth of its workforce as it tackles poor performance © Charlie Bibby/ft
Duncan McKinne, one of its top fund managers, suddenly set off in mid-February, with a move that people near the company said were unrelated to the wider recruitment.
Separately, the company had to navigate its relationship with Crispin Odey, one of the company’s original investors reported by FT in 2023.
Ruffer moved into his relationship with Odey by changing the Ruffer LLP and the existence of Ruffer’s dominance. We confirmed that there was no relationship between running or monitoring of RufferLLP.
Following the report of allegations against Crispin Audie, one former Raffer investor who sold his shares in Laffer has since said, “it’s low performance and the fees are high. … Frankly, cash and gold leaf are the better options.” Lafar declined to comment.
Lafar is also preparing to retire Jonathan Lafar, the chairman who has been thwarted of involvement in recent years.
“Jonathan is in his figure and his departure will be iconic,” Early said. “But the investment call has been led by Henry Maxey for over a decade.”
Ruffer has adjusted its investment strategy in response to poor performance and has changed the so-called “growth” assets combination.
This change has driven 3.8% profits in the Total Return Fund so far in 2025. 4.8% for the 12 months leading up to the end of February. The Bank of England’s base rate is currently 4.5%.
Lafar’s manager remains optimistic. The company said the opportunities from its current investment positioning are “the best we’ve seen in years.”
“Because of the prevalent belief in US exceptionalism, which we believe we are fleeing, there was a possibility of “huge” with very attractive assets traded at a down price, which added.
Even former investors believe that Laffer’s strategy may require brilliance, but it can regain that brilliance.
“The next time the market crashes, especially when we crash on a massive scale, Laffer will probably have a moment under the sun.”
