"We continue to keep the faith in Japan. Indeed we see our Japanese equities as both offensive and protective; the former because they are equities, and in the case of the holdings in banks, brokerages and life companies, they generally exhibit a beta greater than one," Russell said.
He added that they are also protective as, if bond yield curves steepened without inflation, the Japanese life companies would be the main offset to Ruffer Investment Company's 'golden egg,' its UK2055 index-linked holding, which would perform badly in such circumstances.
The group is 22 per cent invested in Japan, making the country its second most popular investment region after the UK.
In the latest update from the company, Russell said its net asset value (NAV) had fallen 0.1 per cent during August to 181.45p. The share price fell 0.3 per cent in August, while the premium over NAV was 6.1 per cent.
Over three and five years the company's performance against its IT Global Growth and Income sector has been outstanding; it returned 69 and 47 per cent respectively in excess of its sector. Relative performance over a one year period has plummeted, however, Financial Express data shows.
Performance of Ruffer Investment Company vs IT Global Growth and Income
Source: Financial Express Analytics
While companies in the sector returned 22.8 per cent to investors on average, the Ruffer investment trust lagged behind with just a 7.5 per cent return in the 12 months to 8 September.
Going forwards the manager expects the volatility seen so far this year to continue, and is protecting against the deflationary potholes he anticipates via index-linked bonds. The company has also bought a holding in pharmacy giant GlaxoSmithKline in the past month, calling its balance sheet 'rock solid,' and saying the growth prospects for the company are underappreciated.
The manager is not expecting a double dip, however, saying increased corporate spending via both mergers and acquisitions and reviving capital spending will keep economic growth in check.
At the start of the month Ruffer Investment Company's board announced its intention to undertake a private placement of shares, in a bid to raise up to £50m.