UK fund manager Ruffer Investment Management shifted over $748 million of its clients’ fortunes into Bitcoin (BTC) in December last year. In the latest document revealed, Ruffer stands by its move as it believes Bitcoin is a challenger to gold.
The British fund manager previously announced it had bet 550 million pounds on the largest cryptocurrency by market cap. In a review covering the six months to December 31, 2020, Ruffer said it has a history of using “unconventional protections”. Additionally, it views Bitcoin in that same vein during a prolonged period of low interest rates.
“We think we are relatively early to this, at the foothills of a long trend of institutional adoption and financialisation of bitcoin,” Ruffer said, adding that Bitcoin’s “bad reputation” is a risk premium.
“As we move through the process of normalisation, regulation, and institutionalisation, the compression of this premium can have a dramatic effect on the price. If we are wrong, bitcoin will return to the shadows and we will lose money – this explains why we have kept the position size small but meaningful,” it added.
Ruffer Investment, which manages $20.3 billion in assets, announced in December it allocated 2.5% of its Multi-Strategies Fund to Bitcoin, as one of the largest signals of rising institutional interest in cryptocurrencies in 2020.
Bitcoin is a Challenger to Gold
The 550 million pounds bet on Bitcoin in December is likely to turn into a profit for the fund. Since the beginning of this year, Bitcoin has accumulated a 29% gain. It is now trading at $36,680, up 2% over the last 24 hours.
With a client base mainly individuals and families, pension funds and charities, the UK asset manager reassures that the company remains confident in its “unconventional” Bitcoin investment.
In a personal investment review published last week, Ruffer’s chairman Jonathan Ruffer said Bitcoin is becoming a challenger to gold’s standing as the one supra-currency, the thing to own when fiat currencies are struggling.
Ruffer noted the firm had assessed thoroughly about Bitcoin before making the allocation. “And our judgement is that it is a unique beast as an emerging store of value, blending some of the benefits of technology and gold.”
“Yes, it is a seemingly non-sensical asset – but one that makes absolute sense for how we see the world,” he said. “We are in the business of keeping clients safe, and we are nervously satisfied that bitcoin has a small part to play in the pudding.”