Monthly Investment Report - May 2025.

10 June 2025

RUFFER INVESTMENT COMPANY LIMITED

(a closed-ended investment company incorporated in Guernsey with registration number 41966)

(the "Company")

Attached is a link to the Monthly Investment Report for May 2025:

http://www.rns-pdf.londonstockexchange.com/rns/0415M_1-2025-6-9.pdf

Having nearly recovered by the end of April from the 'Liberation Day' shock, stock markets across all regions posted strong returns in May. While equities may imply we have returned to plain sailing, the volatility in the bond market suggests there are storms brewing. The fund continued to make positive progress through the month, compounding the gains made so far this year.

Further tariff de-escalation juiced the relief rally. The S&P 500 index returned to positive territory year to date, though remaining some way off February's all-time highs. The primary driver was the reset of China trade negotiations, with US reciprocal tariffs being reduced from 145% to 30%, and China's retaliatory tariffs from 125% to 10%. While we have little certainty of the US trade policy end state, markets have assumed it will not be as severe as the 2 April announcements. In terms of economic data, sentiment has improved dramatically since the tariff rollbacks, and the fundamentals do not yet provide evidence of significant weakening. In the eyes of the market, reduced tail risks and better-than-expected data saw rising equity prices and collapsing volatility. Anticipating a more benign period through the tariff pause, we tactically increased equity exposure through S&P 500 call options, which were attractively priced due to falling implied volatility.

It was concerns around the US fiscal situation that started to trouble bond markets. The two main tightening forces - the Department of Government Efficiency and tariffs - have been rolled back, while President Trump's 'One Big Beautiful Bill' Act extends tax cuts and increases spending. This shift has been reflected in the US dollar and treasury yields, which have notably diverged since April. This was not purely a US phenomenon as long-dated bonds sold off globally, with the Japan 30 year yield spiking to an all-time high of 3.18%. We are always looking to take advantage of dislocations and provide liquidity in times of acute market stress. As a result, we initiated a small position in 30 year Japanese government bonds, where local market dynamics exacerbated the yield surge. Nonetheless, the portfolio's interest rate sensitivity remains low versus history because of our structural concerns around inflation and government indebtedness.

Our focus remains on navigating market volatility without losing sight of the structural challenges. Firstly, investors are reconsidering their overweight exposure to US assets and the dollar. The rest of the world is now planning to increase government spending while the US' ability to fund its own spending is being questioned. Secondly, recent events are accelerating the shift from monetary to fiscal policy dominance, which increases our concerns around inflation. We believe we are entering a regime of more volatile and elevated inflation, which will challenge the reliability of equity and bond returns, as well as the stability of their correlation.

Enquiries:

Apex Fund and Corporate Services (Guernsey) Limited

Company Secretary

Nicole Liebenberg

DDI: +44(0)20 3530 3653

Email: ric@apexgroup.com

LEI: 21380068AHZKY7MKNO47