Manager Research

We first did a due diligence on the Orbis Global Balanced Fund in 2015 and allocated a Tier 3 rating to the fund. While we rate the Orbis business, their equity investment process and the Orbis investment team highly, we had several concerns with this specific offering at that time.

Firstly, the process deviated materially from the established Orbis Global Equity approach to equity selection – both in portfolio construction and the type of companies they find attractive.  The portfolio manager, Alec Cutler, had relative autonomy in decision making, which is different to the standard Orbis process of having portfolio managers co-manage the funds. We felt uncomfortable that the approach differed from the long standing process and was untested.  

Secondly, in our opinion, the fixed income team lacked the breadth and depth to take advantage of the opportunity set available to them given that theoretically the fund would allocate material capital to fixed income through a cycle.

Lastly, this was Orbis’s first real foray into global asset allocation, and while there is some evidence of asset allocation ability, it was still an area we wanted to see develop over time. it.

We have spent a lot of time with the Orbis team since then, there have been a number of positive developments in our view. We are seeing a greater alignment with the core Orbis equity process they implement in Global Equity. They have increased the size of the fixed income team and broaden the coverage. Although we would like to see more evidence of this, their asset allocation process appears to have been adding value.

These positive developments have given us greater confidence in the fund delivering on its objectives over time, justifying a Tier 2 rating allocation. We will continue to monitor the fund to see if our remaining concerns are addressed over time.