From macroeconomic risks and tailwinds, to sustainability, investment strategy, innovation and advice business risk management, the 2025 Allan Gray Investment Conference centred on two central themes: resilience and adaptability – the cornerstones to navigating a world and investment landscape in flux. Thandi Skade provides a brief summary of the key takeouts from this year’s conference.
Favourable macroeconomic conditions mask long-term growth risks
Setting the scene for the day, Mary Curtis, investment strategist at Nedbank, painted a cautiously optimistic outlook on South Africa’s macroeconomic environment over the short term, with conditions looking favourable amid subdued inflation and interest rate cuts expected over the next 12 months. She said that equities are forecast to outperform bonds, with the 10-year government bond currently offering a yield of 8.8% and projected to generate above-inflation returns of between 3-4% over the next five years. From a stocks’ perspective, Curtis cautioned that South Africa’s banking sector faces increased disruption from emerging challenger banks, which will likely constrain continued growth for established industry players.
Curtis noted green shoots in the form of improvements to South Africa’s energy availability factor, but she warned that long-term growth remains under threat by the country’s persistently low investment-to-GDP ratio. This sentiment was echoed by Allan Gray portfolio manager Thalia Petousis during the Q&A session. They noted that while private sector capital expenditure is rising and public sector execution remains slow, improved performance among state-owned enterprises and rising tourism figures offer some hope. They stressed the need for structural investment challenges to be addressed to sustain momentum.
Petousis also touched on the uptick in South African government bond inflows, which captured record-breaking foreigner inflows of R70 billion (more than six times oversubscribed) at successive auctions in September. This, she said, indicates an increased appetite among foreign investors to direct more of their offshore allocations to emerging market economies, albeit on fine margins. However, Petousis flagged additional political shocks and ongoing corruption left unabated as among some of the major risks that could derail South Africa’s foreign investment story in the long term.
South Africa’s sustainability: A balancing act between reform and risk
Allan Gray ESG analyst Raine Adams explored South Africa’s sustainability path with a focus on infrastructure reform. While electricity supply has stabilised thanks to capacity being returned to service and new capacity coming online, rooftop solar expansion, embedded generation rollout and (on the downside) demand destruction due to escalating tariffs, Adams warned that concerns remain over Eskom’s spiralling municipal debt and aging coal fleet, which requires progress in baseload power replacement.
Reforms such as the unbundling of Eskom’s transmission business and NERSA granting electricity trading licenses are promising, but grid constraints and slow transmission build-out must be addressed to ensure the country’s long-term energy sustainability.
Beyond power, Adams said that logistics and water infrastructure challenges remain bottlenecks to progress, with local governments a key concern in the case of water service delivery. However, a few green shoots, such as increased private sector participation and targeted reforms, bring optimism.
Resilience, adaptability and the long-term view
Amid a world in flux, Orbis president and portfolio manager Adam R. Karr highlighted the importance of resilience, adaptability and long-term thinking in seeking out new investment opportunities. Using ants as a metaphor, he drew parallels between how a colony responds to change and the strategic changes that Orbis has implemented in the past three years, such as restructuring the portfolio management team and refining the research pipeline, which have contributed to stronger performance outcomes.
Karr also discussed the current investment landscape and noted the high valuations and concentration in US markets. He said Orbis was finding value in undervalued sectors like healthcare. He concluded with a reminder on “the power of N”, the exponential impact of time on compounding returns, and reaffirmed Orbis’ commitment to being resilient, adaptive and taking a long-term view.
The Boxer story
Boxer has emerged as a standout South African retail success story, growing from a small cash-and-carry business with five stores in the early 1990s to a R36 billion JSE-listed business with over 500 stores. Boxer was acquired by Pick n Pay in 2002 for R186 million, which now seems like a bargain given the company has delivered a 192 times return and now contributes more than 100% of Pick n Pay’s profits. Boxer CEO Marek Masojada said that the retailer’s evolution into a soft discounter with a lean product range, efficient operations and strong community integration had enabled the business to thrive in underserved markets while maintaining a low-cost, high-volume model.
Masojada explained that the company’s strategy is anchored in a “virtuous circle” driven by volume, value, efficiency, expansion and innovation. This approach has driven rapid store rollouts that include liquor and building supply stores and expanding its footprint in provinces like the Western Cape. He said the company’s focus on local hiring, community engagement and responsiveness to social grant cycles has cemented its relevance in lower-income areas. He added that collaborations with Capitec and a growing data-driven loyalty programme reflect its push into value-added services and supplier analytics to position Boxer to achieve ongoing growth and impact.
Back to the old drawing board: First principles and the lost art of investing through crises
Grant Williams, renowned publisher and podcast host, presented a thought-provoking reflection on the profound changes shaping the global investment landscape, drawing on historical cycles, demographic shifts and macroeconomic trends to underpin why he proposes a return to first principles to navigate the changes. He argued that the past 40 years have been defined by powerful tailwinds, such as falling interest rates, rising asset prices and abundant capital, that have made wealth creation relatively straightforward. He cautioned that these conditions are unlikely to persist and that investors need to prepare for a future potentially shaped by headwinds.
Williams explained that a return to first principles means anchoring on qualities like scarcity, durability, resilience, trust, time preference and an acceptance of uncertainty. He said that these factors, which are often overlooked during decades of easy money, are now essential for evaluating businesses and allocating capital.
Williams emphasised that resilience and moral character, both in investors and in the companies they back, will be critical in a more volatile, less forgiving world, and encouraged advisers to embrace the discomfort of change and to view the current inflection point not as a threat, but rather as an opportunity to build investment portfolios that are grounded in long-term value.
The Allan Gray Investment Platform celebrates 20 years
Tamryn Lamb, head of Retail at Allan Gray, reflected on the 20-year journey of the Allan Gray Investment Platform and highlighted the many ways that the industry landscape and client and adviser needs have evolved over the years – from requiring wider fund ranges and more offshore options to the evolution of multi-asset funds and building blocks.
She shared the three key things that keep the Allan Gray leadership team awake at night are: 1. Avoiding complacency, 2. Remaining relevant and 3. Maintaining a sustainable business. She said that these concerns are mitigated by striving to leverage the “power of 1%” – i.e. continuously making small improvements leads to exponential results – to move things forward. Over the past two decades the Allan Gray Investment Platform has expanded from a range of 50 funds to 1 281 funds today and the firm has invested heavily, and continues to invest heavily, in technology developments that enable us to build scale and help us create value for financial advisers.
Shaun Duddy, head of Retail Product Development at Allan Gray, shared several product-related updates including that multi-manager funds, previously restricted to Umbrella Fund members, are now available to intermediated retail investors. Regarding offshore capacity, Duddy noted the launch of our co-named funds and regulatory approval for the launch of Allan Gray actively managed exchange traded funds (AMETFs) as two major steps the business has taken to ensure investors can access our Allan Gray-Orbis rand-denominated offshore strategies. More broadly, this also gives us more flexibility to manage offshore capacity across our products.
The rising cost of cybercrime
Cyber risk has become an everyday business reality. Once the domain of isolated hackers, cybercrime is now a vast global industry that in 2025 is projected to result in losses to the value of US$10.3 trillion and cost the global GDP around 1.5%. Andrew Henwood, cybersecurity expert and BlckRhino CEO, explained that the shift to online operations during the COVID-19 pandemic drove the exponential growth of the industry and exposed how deeply interconnected systems have become.
Email remains the most common gateway for attacks, with nearly a third of all cyber incidents originating from emails – be it data compromise, cyber extortion, ransomware or phishing messages – many of which are now enhanced by AI. Henwood warned that business email compromise remains the biggest threat for companies, with reported losses in South Africa tapping R1 trillion to date. He said that attackers exploit existing conversations and relationships and wait until the point at which a transaction is being actioned to pounce. Most breaches stem from stolen credentials or misconfigurations.
Henwood advised that businesses should use multifactor authentication across systems, review successful logins as well as failures and ensure that their domain-based message authentication, reporting and conformance (DMARC) protocol is correctly configured. Allan Gray head of Group IT Craig Sales and Faizil Jakoet, head of Retail Client Services at Allan Gray noted that the firm’s IT team run regular phishing awareness campaigns companywide to maintain high levels of attentiveness.
Unlocking enterprise value in your advice business
Ian Jones, Fundhouse CEO, rounded off the conference with valuable insights into how financial advisers can unlock enterprise value, which starts by having a clear understanding of three separate, but important ideas: 1. Valuation (a risk-adjusted view of future cash flows), 2. Value creation (the daily work of improving growth and efficiency) and 3. Price (the amount a specific buyer will pay under a specific structure).
Jones said that advice businesses that tend to succeed at creating enterprise value share several traits, such as having a clear client value proposition, a defined client profile, planning for capacity, keeping fee structures standard and tiered, all of which make forecasting easier and more accurate, and enable clearer conversions.
Jones also stressed the importance of investing in people and systems, and outsourcing where it makes sense, to enable advisers to free up time and capacity for more client-focused work.
Touching on elements of succession planning that advisers should be mindful of from a buyer’s perspective is that they tend to look closely at continuity, client durability and business quality long before they debate multiples. A good way to approach a succession transition is through well-planned client handovers that include several joint meetings over a period of time to allow all parties involved the opportunity to build relationships and trust. This is ultimately a lever that buyers can pull to strengthen their retention strategy.
Daniel van Andel, head of Platform and Adviser Proposition at Allan Gray, noted the benefits that financial advisers can derive from using a light dashboard that includes variables for the client mix, capacity, net flows, fee yield, retention and complaints, as this offers visibility to guide decision-making. With this view, conversations around growth, remuneration and service design can become easier and foster a culture where valuation becomes a natural by-product of running a resilient, client-centred business.
Resilience key for successful long-term investing
One clear message resonated across each discussion held: Achieving success in the current environment requires resilience, continuous innovation and a willingness to embrace change. Whether navigating macroeconomic shifts, driving sustainability reforms, or safeguarding against new risks, the path forward lies in adaptability and taking a long-term view.