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Investment insights

The next 45 years

This year marks 45 years of investing our clients’ hard-earned savings. The milestone provides an opportunity to reflect on our past, and we use these insights to continue delivering on our promise to create long-term wealth for our clients.

Allan Gray was founded in 1973 when Allan W B Gray returned to South Africa after working for an asset management firm in the US. His philosophy was simple: Pursue superior long-term returns for clients, without taking undue risks. We have adhered to our founder’s values for 45 years, and they have served our clients well through an ever-changing investing landscape. 

Reflecting on our history reveals uncomfortable periods when our courage and conviction have been tested. Our worst period of underperformance to date occurred between 1997 and 1998, during the height of South Africa’s tech and financial bubble. Our equity portfolio, which was overweight in resource and property shares, lagged behind the FTSE/JSE All Share Index (ALSI) by 18% over a rolling 12-month period. During that time, we lost a large number of our clients. However, we believed that large portions of the market were extremely expensive and did not want to risk our clients’ capital by following the herd. This was not easy, but we firmly believed we were acting in our clients’ best interests. 

The tide eventually turned in October 1998 when the tech bubble burst. The market recognised the significant value in the depressed commodity and property shares, and Allan Gray went on to deliver its best year of outperformance in 1999. That period, and indeed the commodity super cycle peak and global financial crisis of 2007/8, are burned into the DNA of the investment team and the business principles of the firm.

Conviction is key

We can’t predict when the next bubble will occur. However, we work hard to ensure that the business is resilient and that the investment team can maintain a contrarian view in which they have high conviction. To this end, we ensure that our investment process is as effective as possible. Here are some examples:

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