The Zhitong Finance App learned that Ruffer LLP, a British asset management company that manages 22 billion pounds (about 27.6 billion US dollars) of assets, recently adopted the largest cash holding strategy in history. This move reflects their deep concerns about a possible drastic reversal in the market.

According to the agency's fund manager Matt Smith (Matt Smith), two-thirds of the funds they manage are currently allocated as cash, which is a record high percentage. Proceeds from this portion of cash are being used to buy insurance policies such as credit default swaps and US stock options to prevent a sharp fall on Wall Street.

Smith said that the Federal Reserve is about to begin reducing liquidity, and possible huge market fluctuations may occur within the next three months. He pointed out, “This extremely volatile sales ecosystem may operate in reverse.”

According to our understanding, Ruffer's free-allocation strategy allows the company to focus on one or two concentrated investments rather than simply following industry benchmarks. Although the company successfully bet on Bitcoin in 2020, they wanted to avoid losing more than 6% of their total return fund during the 2023 global stock market surge and bond market rebound.

Smith also pointed out that the market's excessive optimism about US interest rate cuts has led to market prices being close to perfect, which increases liquidity risks similar to “Black Monday.”

According to reports, “Black Monday” means that on October 19, 1987, the US stock market suddenly fell sharply, and the Dow Jones Industrial Average plummeted 22.6% in a single day. This day got its name. This large-scale stock market crash was mainly the result of a combination of factors such as overheating of the market, excessive trading, programmatic trading, and market panic.

Although the latest high inflation data in the US makes the future of US easing bleak, Ruffer's views are still one of the most pessimistic in the market.

Smith emphasized that now is an important time to focus on capital protection, which helped the company bring investors 16% returns during the 2008 global financial crisis. “We have two investment goals: one is capital protection, and the other is to achieve better returns than cash, but the latter is a secondary goal.”

Of course, the longer the market remains strong, the more opportunities Ruffer may miss. The company's typical portfolio has had an average annual return of 8.1% since inception, while Ruffer's return on cash has averaged around 5% over its 30-year history.

Ruffer has also invested heavily in long-term UK inflation-linked bonds and gold mining companies. Smith said, “We have experienced a change in the system from an upper limit of inflation of 2% to a lower limit of 2%.” This means that structural interest rates and inflation are rising.

Through these actions, Ruffer has shown that it is highly cautious about the current market, prepared to deal with possible financial market reversals, and protect and grow client capital in the process. This strategy reflects the company's careful consideration of future market trends and a rigorous analysis of the current economic environment.