Around 46pc of the trust is in other investment trusts, exchange-traded funds and listed property companies.
These include infrastructure trusts, specific discount opportunities and residential property landlord Grainger.
Finally, Capital Gearing has 25pc in “dry powder” (short-dated bonds and cash), which can be put to work quickly in the event of a sell-off.
Ruffer has more money in individual shares, which account for 41pc of the portfolio.
Its managers, Hamish Baillie and Duncan MacInnes, favour economically sensitive stocks such as BP and NatWest.
The fund has meaningful exposure to inflation-linked government bonds, which account for 28pc of the trust. Its managers prefer gilts over Tips. Eight per cent is in gold.
Notably, the fund has almost 14pc in “unconventional protection”, comprising derivatives and credit default swaps. The latter is a form of insurance on bonds that offsets the risk that a borrower defaults.
As investors start to worry more about the risk of default, Baillie expects these investments to grow in value. They also offer a negative correlation to shares and bonds, which the fund manager expects to start to move in tandem.
When it comes to derivatives, Ruffer uses “equity put options” to profit from falling shares and “interest rate options” to protect the portfolio from the effects of rising bond yields.
Ruffer and Capital Gearing deserve a place in any portfolio because they have shown they can protect shareholders’ capital through challenging periods.
According to Investec, Ruffer has delivered a cumulative 9.4pc gain in net asset value across six market crashes, which include the financial crisis and the Covid-induced sell-off in 2020, while global shares fell by 152pc. Capital Gearing returned 3.3pc.
Questor hopes this is a sign of things to come for Ruffer and Capital Gearing in light of the challenging conditions that lie ahead.
The one sticking point is that they trade on respective premiums of 1.8pc and 2.3pc. Hold.
Questor says: hold; hold
Ticker: RICA; CGT
Share price at close: 306p, £51.30
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