April was a good month for stock market investors, boosted by support from governments and central banks around the world to tackle the economic fallout from the coronavirus pandemic.

One of the biggest beneficiaries has been investment trust Ruffer Investment Company (RICA), which in April recorded its biggest ever one-month share price rise (+10.4%) and the second biggest jump in its net asset value (+5.8%). By comparison its FTSE All-Share benchmark rose 5% during the month.

The trust’s managers, Hamish Baillie and Duncan MacInnes, put a large part of their outperformance down to their decision in March to top up their allocation to gold.

While the managers see share prices continuing to trend higher, they warn that accommodative fiscal and monetary policies, which have so far helped to support markets, will be pulled back if the rise in shares continues to be dislocated from economic reality.

They comment: ‘For now the balance appears to be in favour of price appreciation; we would only caution that if markets run significantly higher, politicians and central bankers may be faced with the exceptionally toxic combination of both stock markets and unemployment at record highs, and it is likely that they will amend or withdraw accommodative market policy in favour of policies that benefit workers rather than corporates.’

Baillie and MacInnes increased their exposure to gold and gold miners to 10.9% of their portfolio in March after the ‘implosion’ of levered gold mining exchange-traded funds (ETFs) left prices in gold miners attractive.

Gold miners then rebounded in April with one holding, American giant Newmont – the world’s largest gold miner – now among the top performing stocks in the S&P 500 this year. At 3.4%, gold and gold miners accounted for over half of Ruffer’s return in April.

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