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UK multimillionaire Jonathan Rafer has admitted his cash-strapped investment boutique “failed to meet its objectives” by delivering lower-than-cash returns for clients for the second year in a row.
Rafer, who co-founded Rafer Investment Management three decades ago, said in his annual review that the £20bn firm’s strategy lagged its cash benchmarks in 2024 and 2023.
The philanthropist, who also chairs the firm, said that as the U.S. stock market tumbled and the Japanese yen strengthened against the dollar, Rafer’s misrepresentation of funds hurt its investment approach.
The S&P 500 is up more than a fifth in 2024, while Rafer’s flagship total return fund delivered 4.4 per cent in the year to the end of September last year, compared with the UK bank rate of 5.25 per cent, according to the firm.
“We were positioned for a dislocation when the S&P was lower: it was wrong, but not distorted — the nature of bubble valuations is that they somehow validate the euphoria of a trip to the moon,” Rafer said in his annual update.
“The yen continues to fall and exporters rise. Had we kept 4 percent of the portfolio in these equity offsets, we could have collected solid gains on a regular basis. . . We didn’t do this, because we were particularly concerned about the dangers of equities as an asset class.
“Eliminating this single error, by itself, will not rescue our performance in terms of cash-plus returns, but it will help substantially.”
His comments came after he received a share in the firm’s £89.8mn payout for the year to the end of March 2024 – equating to around £2mn for its 44 partners – down from £95mn the previous year. Operating profit fell 14 per cent year-on-year to £119m.
Rafer’s flagship Total Return Fund aims to “provide consistent positive returns, regardless of how the financial market performs”. But the strategy returned a negative 3.8 percent in 2023.
The fund boutique has seen a slowdown in equity markets, taking a defensive position in long-dated, inflation-linked bonds and betting against growth stocks with short positions.
But Raffer said the company will maintain its investment position. “We continue to wrangle in the bull tack; The assets we pick tend to have good days with bad weeks.
“It’s not by accident that we still have a portfolio that can take full advantage of some degree of system shock. Why say that without arrogance? It relates to the price level of the major American equity market in three words: S&P 6,000.”
Last year, the investment company Dr Cut about 20 roles From its 330-strong headcount at the time, including positions in its private client and risk teams.
