Page 176 - Profile's Unit Trusts & Collective Investments - September 2025

Chapter 9 Fund manager interviews

„ The first half of 2025, however, was marked by significant volatility driven by tariff disputes
and heightened geopolitical tensions. In that environment, high-quality global equity portfolios
were a source of liquidity, which weighed on short-term relative performance. Encouragingly,
by the time of writing (shortly after the half-year end) our focused portfolio of profitable, growing,
world-class businesses has already more than recovered, and remains well positioned to
compound shareholder wealth in real, hard-currency terms.

In terms of risk management, what methods or strategies are you able to use to protect your
clients’ investments?
We define risk as the permanent loss of capital, rather than short-term volatility. Equities are
inherently volatile, and it is this very volatility that rewards the patient investor over time.
At a company level, we manage risk by owning high-quality businesses that adhere to our
Quality Philosophy. This means companies that have an embedded culture of integrity, and are well
managed, and profitable with long runways for growth. These companies have proven their ability to
compound shareholder wealth through multiple business cycles.
At the portfolio level, we employ zero leverage, maintain prudent diversification, and size positions
carefully. This discipline ensures that no single holding can permanently impair capital, allowing us
to protect and grow our clients’ wealth over the long term.
Comment on the year ahead and, if possible, estimate the performance of your fund over 2 or
3 years. What are your targets and objectives for the year ahead?
Our objective is to deliver returns that exceed the MSCI All Country World Index by 3-5 percentage
points per year, net of all fees and costs, over the medium-to-long term. At present, our focused
portfolio of high-quality, profitable, and growing global businesses is attractively valued relative to
the benchmark and, in our view, well positioned to compound shareholder wealth, in hard currency,
over the years ahead.
Are equity markets in general overpriced? Do you anticipate a significant correction?
On a historical basis, global markets, as measured by the MSCI All Country World Index P/E, are
expensive relative to long term averages, though nowhere near bubble levels. A correction would be
unsurprising if long term bond yields continue to rise, earnings growth falters, or an external shock
unsettles financial markets.
We manage client assets with caution and discipline. Our focused portfolio is comprised of
world-class businesses that have been tested across cycles and proven their ability to compound
shareholder wealth through all conditions.
Offshore investments are heavily influenced by the rand. Give your view on the rand over the
next 1, 3 and 5 years.
We do not forecast the rand (or any other economic variable) as such predictions are highly
uncertain. Our focus is instead on owning a portfolio of the world’s best businesses that are well-
managed, profitable, and with long growth runways, compounding shareholder wealth, in hard
currency, over time.
Our global equity mandates are managed in US dollars with the objective of outperforming the
MSCI All Country World Index after fees. The rand return of our funds therefore reflects both this
hard-currency performance and movements in the USD/ZAR exchange rate, which we do not
hedge.
Over the long term, the rand has tended to weaken against hard currencies, reflecting structural
volatility and a steady decline in South Africa’s productivity per capita in US dollar terms. While we
make no short-term forecasts, this trend reinforces our conviction that owning high-quality global
equities in hard currency is one of the most effective ways for South African investors to preserve
and grow wealth over the medium-to-long term.

174 Profile’s Unit Trusts & Collective Investments September 2025