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Quarterly Commentary

2022 Q4 Comments from the Chief Operating Officer

Instability hit the world with renewed force in 2022. All this uncertainty reminds me of Hyman Minsky’s quote: “Stability leads to instability. The more stable things become and the longer things are stable, the more unstable they will be when the crisis hits.”

The year saw big technology stocks, which had been the easy winners of the previous few years, suffer substantial declines, as well as interest rates, which were kept artificially low for over a decade, suddenly being ratcheted up by central banks in an effort to tame inflation. Inflation has been fuelled by the Ukraine war, resulting in higher energy and food prices and ongoing supply chain disruptions. The outcome for global markets was equities and bonds falling in tandem in 2022 – a phenomenon not often experienced – calling into question the value of the typical balanced portfolio 60% equities and 40% bonds mindset. Cash proved to be king, outperforming most asset classes, with the exception of commodities.

Political and economic risks continue to form a cloudy backdrop in South Africa, with Eskom’s woes and the global energy crisis adding to the gloom. February will be a telling month as we await the national budget, which gives us a true sense of the state of our finances.

Increasing the angst is the risk of South Africa being greylisted by the Financial Action Task Force (FATF), a global organisation combating money laundering internationally. While there is no ban on doing business with countries on the greylist, it could impede inward capital flows and impose heavier compliance requirements – and therefore costs – on doing business with South Africa. Sandy McGregor discusses greylisting in his piece this quarter, looking at whether South Africa will be greylisted, and what the consequences would be.

Negativity can present opportunity

While not a calm and comfortable setting for a story, negativity tends to present opportunity if one can focus beyond the short-term noise. It is not always comfortable to follow this approach, but patience can pay off. Some of our investment theses have started to play out, resulting in improved relative performance across most of our unit trusts in 2022.

The improved shorter-term performance is starting to feed through into the longer-term numbers for many of our funds. Of course, there is further work to be done, as our chief investment officer, Duncan Artus, discusses in his first investment update video of the year.

Adding to performance was a strong contribution from our offshore partner, Orbis, despite the World Index and Global Bond Index being down significantly. In his president’s letter, Adam Karr provides a performance review, reflecting on the goals he set when he was appointed and measuring the success of Orbis’ efforts over the past 12 months. He also looks back at the factors that drove the markets in 2022 and discusses what you can expect in the year ahead.

… the road ahead remains mired in uncertainty. As your investment manager, we undertake to use our decades of experience to see you through this cycle.

As suggested above, in times like these, we try not to be distracted by the negative news flow and macroeconomic woes; rather, we focus our efforts on using our investment philosophy to assess the true value of companies and uncover long-term investment opportunities.

One of these is Anheuser-Busch InBev (AB InBev), the world’s largest and most profitable brewer, with more than 500 beer brands and operations in nearly 50 countries. The market has several concerns about the company which are currently weighing on its share price. Jithen Pillay explains why we believe its fundamentals are robust and why it presents an attractive opportunity for our clients.

Balancing risk and return

Our Balanced Fund invests across asset classes in line with investment limits prescribed by the retirement fund regulations. It not only invests in companies that we believe are undervalued and trading at a margin of safety discount to our estimate of their intrinsic value, but also contrasts the attractiveness of these shares to cash and bonds, locally and globally. We build the Fund in this bottom-up manner not only to try to protect your investments against the risk of capital loss, but also to try and find the most attractive assets to invest in, while managing the asset allocation and diversification in the Fund.

Given the regulator’s announcement last year of increased flexibility for balanced funds to invest more offshore, Tamryn Lamb looks at the role balanced funds have played in your portfolio over time and how this may evolve going forward. Tamryn also discusses why, given our relationship with Orbis, we are well placed to take advantage of this relaxation in exchange controls and offer a compelling investment proposition.

Maximise tax benefits this February

Circling back to February and the end of the tax year, we would like to take the opportunity to remind you to maximise the annual tax benefits of retirement products and tax-free investments (TFIs) – if you have not already done so. While you are in this mode, it also makes sense to take some time to get your tax affairs in order. In this quarter’s Investing Tutorial, Carla Rossouw offers some practical tips.

Remember, if you are planning to make use of the tax concessions for this tax year by starting a new retirement annuity or TFI, or by making an additional contribution to an existing account, please make sure we receive your instruction, supporting documents and payment well in advance of the end-February deadlines, specified in Carla’s piece.


In November, the Allan Gray Orbis Foundation bid farewell to their CEO, Yogavelli Nambiar, after five years at the helm. Acting CEO, Dr Nontobeko Mabizela, shares some highlights of the Foundation’s activities over the course of 2022 and looks towards the challenges and opportunities 2023 presents.

While we may have been hoping for a calmer ride this year, the road ahead remains mired in uncertainty. As your investment manager, we undertake to use our decades of experience to see you through this cycle.

Thank you for your ongoing trust, and I wish you all the best for the year ahead.

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