NEW YORK, May 19 (Reuters) – British fund manager Ruffer Investment Management is in talks with institutional investors to expand a recently launched US investment vehicle that it hopes will grow to assets of According to a Ruffer manager, it will grow to $5 billion.
Ruffer’s largest allocation is to inflation-linked bonds, said investment director Jenny Renton, and his long-held view that markets must cope with structurally higher inflation is attractive to US investors.
“The timing was good, our story resonated, our fears about inflation and inflation volatility resonated,” Renton said in an interview Monday.
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Ruffer, which according to its website has £26.2 billion ($32.70 billion) in assets under management, launched a US investment vehicle in January that is now worth $500 million, Renton said.
US consumer prices have risen at their fastest rate in decades in recent months, prompting the US Federal Reserve to hike interest rates and reduce its balance sheet to cool the economy. This change in the previously accommodative monetary policy stance has weighed heavily on pretty much every asset class in financial markets this year.
“Our key structural view, which we have held for some time, is that we are moving towards a period of higher inflation with below-inflation yields,” Renton said.
“More importantly, we will see inflation swings in the near term,” Renton added.
As global central banks rapidly withdraw stimulus measures, liquidity in financial markets has deteriorated this year, even in the $20 trillion US Treasury bond market, contributing to wild swings in yields during the day. Continue reading
“Central banks will not be able to tighten conditions to bring inflation back well below the 2% target, so we believe inflation targets will actually move,” Renton said.
($1 = 0.8013 pounds)
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Reporting by Davide Barbuscia; Editing by Will Dunham
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