LONDON- British fund manager Ruffer Investment Management last month added bitcoin now worth around 550 million pounds ($745 million) to its portfolio, a spokesman for the company told Reuters, in one of the largest signals of rising institutional interest in the digital currency this year.

The allocation by Ruffer, which managed 20.3 billion pounds ($27.3 billion) in assets at end-November on behalf of more than 6,500 investors globally, "acts as a hedge to some of the risks that we see in a fragile monetary system and distorted financial markets," the spokesman said via email.

The allocation represents around 2.7% of Ruffer's total assets, he added.

Bitcoin has soared to a record high this year, up 170%, as investors see in the cryptocurrency a hedge against the risk of inflation as governments and central banks turn on the stimulus taps, and a digital payment method that promises to go mainstream.

On Wednesday it was up 1.8% at $19,780, just below from its all-time high of $19,918 hit this month.

The price surge makes bitcoin an attractive bet for investors willing to take riskier positions as they hunt for yield in a record-low interest rate environment.

"Bitcoin diversifies the company's (much larger) investments in gold and inflation-linked bonds, and acts as a hedge to some of the monetary and markets risks we see," Ruffer said in the memo.

($1 = 0.7383 pounds)

(Reporting by Sinead Cruise, Tom Wilson, Anna Irrera, editing by Louise Heavens) ((T.Wilson@thomsonreuters.com; (44) 20 7513 5676; Reuters Messaging: t.wilson.thomsonreuters.com@reuters.net))