(Bloomberg) — Ruffer LLP, the £22 billion ($27.6 billion) UK-based asset manager, is making its biggest-ever bet on cash as shrinking US liquidity boosts the possibility of a violent market reversal.
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Two-thirds of the money it oversees now sits in cash, a record allocation, according to fund manager Matt Smith. The income from that stash is being funneled into insurance policies in the form of credit default swaps and US stock options that will profit in the event of a big decline for Wall Street.
“It could be within the next three months, which is a time when Fed liquidity is going to be coming out,” said Smith. “This huge volatility-selling ecosystem could go reflexively in the other…
