“Turning 50 is an incredible milestone for any business. Over the last five decades, South Africa has experienced immense political, economic and societal changes, which we have been fortunate to endure. It is often acceptable at a significant anniversary, like a golden jubilee, to look back with rose-tinted glasses. However, Mahesh Cooper remains firmly focused on the future, drawing on the experiences of the past to navigate the unknown challenges that the company will face going forward.
As I stand on the shoulders of those who have come before me, I think hard about the paths of our future – the obstacles, the challenges, the threats and the opportunities. I have grouped these into four categories, which I call the four Rs:
Returns
Investment returns are what matters most to you, our clients, and, by design, to the long-term sustainability of our business. Delivering long-term outperformance has always been, and continues to be, our core focus. We construct portfolios with the aim of achieving superior long-term returns. We strive to ensure that our clients understand our investment philosophy and approach and remain invested for long enough to benefit from them.
We have been applying the same investment philosophy since the firm’s inception in 1973. This philosophy, along with our investment process, has stood the test of time through investment and economic cycles, and I continue to believe it will stand us in good stead going forward. As the world moves to more passive investment styles, the markets present us with an opportunity to take advantage of price and valuation dislocations for the long-term benefit of our clients.
There is another form of return that I often think about – return on effort. By “return on effort” I mean focusing on those things internally that deliver the most value to our clients and the business. I think it is easy to justify any work that we do; I think it is harder and far more important to identify the work that yields the most value. As I consider the next 20, 30, 50 years, I truly believe that we must focus our efforts on what yields the greatest results for our clients.
Delivering long-term outperformance has always been, and continues to be our core focus.
Reputation
We are in the business of trust. Understanding that our reputation is key to attracting and retaining clients puts our values and our behaviour front and centre of all we do. We need to remember that our reputation is worth fighting for and be prepared to do so.
As our founder, Allan W B Gray, once said:
“Trust takes years, even decades to engender, yet can be lost in a second through a single inappropriate action. Thus, all of our actions must be consistent with engendering trust, and we should studiously avoid anything which increases the chances of mistrust. One trusts people and firms who do what they say they will do or purport to do and vice versa. Thus, it all starts with the reality of our behaviour, hence the vital importance of our ethos as set out in our core values. We have to walk the walk, talk the talk. We must be trustworthy in all we do. Only if we genuinely act with the utmost integrity, not only in all aspects of our clients’ affairs but also in our everyday lives, will we succeed in achieving our goals.”
Regulation
Regulations are necessary to ensure that clients are protected. Over the last 20 years, the regulatory landscape has changed drastically. We continue to be inundated with local and global regulatory changes and expect that this trend will continue. The implementation of new regulations needs to be clearly planned to ensure that the outcomes match the intentions.
Some of the proposed regulations make sense, others don’t. What worries me is that we do not always have the opportunity to engage constructively. Where we are given the opportunity, we do, and we will continue to do so, so that our clients’ interests are represented. Even in the face of uncertainty over the details of various imminent regulations, it is important that we stay on top of these changes so that we can implement them with agility.
Relevance
The next 20 years are going to look vastly different from the last 20, with advances in technology making it increasingly difficult to predict the pathways of the evolution.
I firmly believe that our investment philosophy will continue to be as relevant in the future as it has been over the last 50 years. Markets are propelled by human emotions of fear and greed, and human emotions can be very irrational. In an age of machine learning and artificial intelligence, our philosophy will prevail as long as machines continue to struggle to predict human emotions. It is our ability to take advantage of periods of irrationality that will continue to make the way we manage money for our clients relevant. The importance of relevance as a business cannot be emphasised enough. If you are not relevant to your clients, why should you exist?
I think it is harder to predict whether our current ways of interacting and engaging with clients and their advisers will endure. Here, technology will continue to play an ever-increasing role, as it does in all aspects of our lives.
We need to continue differentiating between evolutionary and revolutionary changes and to make bold decisions that will keep us relevant in the face of societal changes and political, economic and regulatory uncertainty. How we do business will naturally evolve; how we interact with clients will change, and things that clients worry about will twist and turn. We must be prepared to respond appropriately.
Maintaining our core focus
Our core goal remains long-term wealth creation for our clients. To achieve our goal, we need to focus on these four Rs. But we can only do so by remembering that we are a business of people; our employees are our greatest asset. We will continue to ensure that we have the right people in the right roles to enable us to both embrace the challenges that lie ahead and continue to play a meaningful role in helping South Africans invest for their futures.