Investing for the future – 2017 in review for Allan Gray

KEY TAKEAWAYS:

• Allan Gray Australia Equity Fund has returned over 21% to 7 December, outperforming the market by 7.4%.
• This is now the second year in succession that markets have made reasonably strong returns, making it harder to outperform.
• The launch of the Allan Gray Australia Balanced Fund occurred in 2017, giving investors a third way to access our long-term, contrarian investment strategy.

Written by J.D. de Lange, Allan Gray COO.

If 2016 was a year of strong performance, then 2017 has been a year of looking forward and ensuring we continue to deliver value for our clients.

Not to say the strong performance hasn’t continued; our investors have been well rewarded over the last 12 months, as the Allan Gray Australia Equity Fund has returned over 21% to 7 December, outperforming the market by 7.4%. Our Stable Fund has also performed strongly this year and we also added another fund to our suite that is off to a good start.

This is now the second year in succession that markets have made reasonably strong returns. This has made it harder to outperform, but we have still managed to find some good value opportunities in the market. From here we are optimistic we can continue to deliver over the long term.

 

More milestones

We reached another milestone in 2017, with the launch of the Allan Gray Australia Balanced Fund. This is our first new fund in almost six years and gives investors a third way to access our long-term, contrarian investment strategy. The Balanced Fund is a collaboration between Allan Gray Australia and Orbis, our global sister company. The Fund complements our existing Equity Fund and more cautious Stable Fund, by offering a diversified portfolio of shares, fixed income and commodity investments from Australia and overseas within the convenience of a single product.

The Allan Gray and Orbis groups have almost two decades of experience managing these types of funds globally and the performance of the Australian Fund is off to a strong start. It’s early days, but the Fund has outperformed its benchmark by 3.7% to 7 December since launching on 1 March this year.

Performance of our other offerings has also been strong. Inflows into the Stable Fund have been good, as a growing number of investors have come to understand the strategy of this fund and its potential to outperform cash over the long term.

The Orbis Global Equity Fund (which Allan Gray Australia started distributing to the retail advice industry last November) has gone from strength to strength. 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. Orbis has been running this strategy for almost 30 years. The Fund is now available on most major platforms.

As the business has grown we have also grown our analyst team. The Australian investment team is now the largest it has ever been, with nine members. Three new starters joined this year – Gitendra Pradhananga, Yi-Chan Lee and Sudhir Kissun. As you may know, Allan Gray rarely recruits from within the investment industry. We like our analysts to come with fresh minds and not be tainted with predispositions toward investing. We find this works best to encourage a contrarian mindset. We look primarily for intellect and, like the incumbents, each new member brings an exceptional level of academic ability. Growing the team also helps our plans for long-term succession.

 

Allan Gray out and about

You may have seen Allan Gray’s advertising around the major cities this year, as we ran our second advertising campaign.

The campaign’s aim was to continue to build awareness of our committed, long-term investment approach with Australian investors. The theme was ‘potential’ and featured striking black and white imagery of majestic animals that demonstrated strength, intelligence and agility. Emotive imagery and cinematic footage of an owl and a cheetah shows these animals’ progression from birth to reaching their peak performance.

The campaign used online video content, press and outdoor executions in key transit locations, such as major bus stops and train stations, airports and gyms.

 

Setting up for the future

What does success look like for Allan Gray in future? It is simple really, we need to continue to deliver long-term outperformance and offer the right products, with a well-resourced team.

With this focus we believe we will continue to serve our investors well and add value to their portfolios over the long term.

About Allan Gray

Our long-term, contrarian investment philosophy can be accessed via any of Allan Gray Australia’s three funds – the Equity Fund, the Balanced Fund and the Stable Fund. Whether you are seeking higher long-term returns from Australian equities, growth with lower volatility through a balanced portfolio, or returns that are better than cash we make investing simple.

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