A new chapter unfolds for Allan Gray Australia and our clients…
We are very excited to announce that effective November 2016 Allan Gray Australia will be bringing the Orbis Global Equity Fund (Australia Registered) to the retail advice industry.
For investors who believe in the Allan Gray long-term, contrarian investment philosophy this is an opportunity to broaden their exposure into global equity markets.
Who is Orbis?
Orbis is Allan Gray’s sister company and employs the same investment philosophy and approach.
Orbis was founded by Dr Allan Gray in 1989 and for over 26 years the business has been helping companies and individuals build their wealth by providing focused exposure to global equities. Orbis is now based in 10 locations globally and employs 40 analysts to unearth the best investment ideas. Orbis currently manages around AUD40 billion for clients across 50 countries.
Having been primarily available to institutions, Orbis has spent considerable time and effort building its business so that it can now offer its capability to direct investors and advisers in Australia. It’s an exciting time for the Allan Gray and Orbis group.
Peas in a pod
Orbis and Allan Gray share a singular focus that ensures we are not distracted by things that do not add value for our clients.
We take a long-term approach and employ a contrarian style when buying companies. We buy stakes in businesses like a person on the street would buy them – looking to become a part-owner in a business with a view to benefiting over the long term. This invariably results in a low turnover and trading approach.
At Orbis and Allan Gray we do our own intensive company research and we tend to favour companies that are out of favour with the broader investment community. We like to fish in these areas to find undervalued companies as they offer the best value. Avoiding paying too much for companies is one of the surest ways of reducing risk and protecting capital.
The proof is in the pudding
All money managers apply a process. The question is, how has Orbis performed since launching in 1989? The flagship global equity strategy has beaten the broader market by more than 5% per annum after fees – a significant figure when you consider the compounding effect. Between 1 January 1990 and 30 November 2016 $10,000 would have grown to $193,700, increasing 19 times. In stark contrast the broader market would have grown to just $52,064.
Net returns from 1 January 1990 of the Orbis global equity strategy are illustrative and based on the combined returns of all Orbis global equity funds that share the same global investment objective after applying the retail fee that is available in the Australian-based Global Equity Fund. Australian investors interested in Orbis’ global equity strategy must invest through the Orbis Global Equity Fund (Australia Registered).
Australian retail investors can now access the same global equity strategy through the Australian-based Orbis Global Equity Fund (Australia Registered).
Return information for the Orbis Global Equity Fund (Australia Registered) until 30 November 2015 is illustrative and based on returns of the wholesale class after applying the retail fee. Returns from 1 December 2015 are actual returns of the available class.
The compounding effect of this outperformance has delivered material wealth to those that invested with Orbis. When you think of the difference between the results versus the market it’s made a tremendous difference to the investor and their family’s life.
This performance has propelled Orbis to the number one global equity manager spot over one year and the number two spot for 10 year performance (to 30 November 2016) in the Morningstar Australian Institutional Sector Survey.
Looking to the future – we’re tied to our clients’ success
Whilst it’s nice to look back over time and see how well a manager has performed, as this is arguably proof that the approach has worked in the past, it’s also important to look forward and see what gives us confidence this performance is capable of being repeated and that the anomaly we are trying to exploit is enduring.
To that end, what makes Orbis different? The key for us is our belief that our interests should be tied to our clients’ success.
This attitude is clearly demonstrated by the below points:
- The business is, and always will be, privately owned – we don’t have external shareholders who could influence our commitment to our investment principles
- Senior staff who are offered the opportunity to participate in the profits of the firm, forgo a short-term incentive in favour of long-term alignment. Once they depart the firm, this long-term incentive continues for a period of time such that they genuinely care about the state of the firm post their departure.
- As individuals, staff invest alongside our clients on the same terms and fees – there is no preferential treatment
- We strive to earn the trust and confidence of our clients, focusing on doing what is best them
- We believe investment products should be bought and not sold. Our culture is not to push our funds to clients – we want people to buy our funds when they are comfortable with our philosophy and process
- We do not launch products that are not enduring and we avoid fads and trends.
- We believe we should only do well when our clients do well – more on this below
We do well when you do well
The Fund is being offered with a truly innovative fee structure. As far as we are aware, it is the first of its kind in the retail market.
At Orbis and Allan Gray our base fees are lower than the market average, but we also believe in performance fees as they lead to greater alignment of interest with clients. If the Fund performs well our clients are rewarded and so are we.
But in addition to this the Fund is being offered with a refund mechanism which allows investors to be paid back some of the performance fees in the event the strategy underperforms for a period. Historically this type of fee structure has been made only available to institutions, so it’s an exciting evolution to be able to offer this to retail clients.
The work has begun in terms of making this Fund available via the various platforms advisers and investors use. It’s already available on Netwealth and Hub24 and we expect the Fund to be on the other major platforms early next year. You can of course invest directly with as little $10,000 or $500 per month if opting for a savings plan. The Fund is already available via the ASX mFunds offering.
With a strong rating now in place from both Zenith Investment Partners and Lonsec, the Orbis Global Equity Fund has been identified as a quality choice in global equities.
The opportunity is yours
We believe it is rare that such a compelling investment opportunity comes along for investors. Orbis and Allan Gray have a philosophy and process in place that has remained unchanged for over 26 years at Orbis and over 40 years across the group. The approach is consistent, repeatable and has been demonstrated over the long term in up and down markets and through several cycles.
While it’s an exciting time for our group, most importantly it’s an exceptional opportunity for investors.
We look forward to spending time with you discussing the Orbis Global Equity Fund in more detail. If you would like to know more please contact your local Allan Gray representative or our Client Services team.
Chris Inifer holds a Bachelor of Business Economics and Finance (RMIT University) and a Postgraduate Diploma (with Distinction) in Financial Planning.
Please read this Fund’s Product Disclosure Statement prior to making an investment decision. Past performance is not a reliable indicator of future performance, and your investment may go down as well as up. All information provided by Orbis as at 30 November 2016, unless otherwise indicated.