Manager Research

Allan Gray recently issued a ballot to investors seeking to change the Allan Gray Orbis Global Fund of Funds from a fund of funds structure to a feeder fund. The fund currently allocates to a range of Orbis funds, including Orbis Global Balanced (75%), Global Equity (12%), Optimal (9.5%) and Emerging Markets (3.5%). The change will see the exposure to Orbis Global Balanced increase to 100% of the fund.

Investors have until the 26th of April to vote on the ballot and, if it passes, the changes will be implemented on the 1st of June. The fund’s name will change to Allan Gray Orbis Global Balanced Feeder to reflect the new fund structure. The objective of the fund will remain the same, but the equity index used to calculate the benchmark^[1] performance will change from the FTSE World Index to the MSCI World Index.

Allan Gray has been discussing this change for a while and the proposal has been expected. Portfolio manager Duncan Artus^[2] already manages the fund to reflect Orbis Global Balanced to a large extent, which is evident when considering the Rand-performance of the funds over time. The changes also result in a more sensible fee structure. Investors currently pay management and performance fees on the underlying Orbis funds separately, which means you can pay for performance on some of the underlying funds while the overall fund lags the benchmark. The change will align the incentives with the performance of the overall fund.

We are not concerned by these changes and would be supportive of the ballot. The fund will also retain the current Tier 2 rating.