At Allan Gray, long-term investing is more than a time horizon; it is the foundation of our investment philosophy. Since our inception in 1973, we have believed that the potential to earn long-term returns does not come from predicting short-term market movements, but from identifying assets trading below their intrinsic value and allowing time for that value to be realised. Our long-term track record reflects our commitment to this approach.
How long is long term?
Long term is not a specific time frame. It is a period long enough for fundamentals to outweigh short-term noise. In investing terms, that generally means more than five years. This may sound long, but time allows businesses to grow and strategies to bear fruit. It is the mechanism through which research, judgement and compounding translate into returns. It also helps separate temporary market sentiment from true worth.
In a world that has become overly focused on the now and the temporary, our focus remains on understanding the long-term economics of businesses and investing where we believe there is value. In this edition of our Quarterly Commentary, we offer a range of articles that reflect this view.
Foundations for improved local outcomes
Successful long-term investing is made possible through diversification – i.e. investing across asset classes, sectors and geographies. Given that our local market represents less than 0.5% of global equity markets and is highly concentrated, investing offshore is key. It gives investors access to sectors and companies that are simply not available locally, and offers protection against a range of home-country risks.
Following the 2022 National Budget, the South African Reserve Bank confirmed that the offshore investment limits for all investment and product providers, including retirement funds, would be aligned at 45%. This was very positive news for South African investors, especially for retirement fund members, as it represented a significant relaxation in exchange control regulations and the flexibility to benefit from the global opportunity set.
However, some maintain that the limits are too generous and that they are responsible for the local savings pool shrinking. In their in-depth analysis, Sandy McGregor and Matthew Patterson strongly disagree. They argue that there is a shortage of opportunity, not money, and that forcing investors to allocate more assets locally would constrain diversification, increase risk and ultimately weaken the economy. They go on to show how offshore diversification, in fact, contributes to the health of the savings pool and that policy should be directed at sustaining this important asset. Their ideas are expanded on in the latest Allan Gray Podcast, which you can access via our Latest insights page or your favourite podcasting platform.
The long-term lens
Pieter Koornhof revisits South African hospitality and entertainment group Sun International. Interestingly, 25 years ago, our previous chairman, Simon Marais, wrote a Quarterly Commentary article on the company, which we have dug out of the archives for your interest. Together, the original analysis and Pieter’s piece illustrate how our investment philosophy has remained consistent, even as markets, businesses and our understanding of them have evolved. More than 50 years of investing has produced a rich archive of our investing thinking, and we will reshare pieces from time to time.
In a world that has become overly focused on the now and the temporary, our focus remains on understanding the long-term economics of businesses ...
We share our long-term investment philosophy with our offshore partner, Orbis. It should therefore not be surprising that a long-term message threads through Mark Dunley-Owen’s piece. Mark notes that success can take decades to unfold in great companies. Patience, consistency and an extended time horizon let our clients own businesses with potential that are not yet priced as greats. He delves into the investment cases for Anta Sports, a Chinese company with a portfolio of sportswear brands, Japanese electronic entertainment company Nintendo and British bakery and fast-food chain Greggs – companies Orbis believes are undervalued and have the potential to exceed expectations over time.
Patience pays off
Compounding can have a powerful effect on wealth creation over time, as returns generate further returns. However, long-term outcomes depend not only on growth, but also on limiting losses. Preserving more capital when markets fall leaves more available to benefit from future growth. Thandi Skade explores the interplay between creating growth and managing downside risk, drawing on the performance of the Allan Gray Balanced Fund.
Volatile periods feed our temptation to act, and with technology accelerating the flow of information and making action almost effortless, patience may be an enduring investment advantage. In this quarter’s Investing Tutorial, Daniella Bergman offers some pointers on how to practise patience as an investor.
A belief that business can and should be a force for good
Our long-term approach underpins our whole ecosystem. Our ownership structure reflects our founder, Allan Gray’s, belief that business and society are deeply interconnected. The model gives the business the stability to stay focused on creating value for clients, while philanthropy and social investment extend the benefits of the business’s success to broader society. I invite you to read an extract from our 2026 Impact Report, which describes how a long-term commitment to stewardship, education, entrepreneurship and responsible business can create value that extends well beyond financial returns and will endure for future generations. The full report is available here.
Thank you for trusting us with your long-term investments.