Manager Research

We recently concluded our review of the Orbis Global Equity fund and have decided to retain our Tier 2 rating.

Orbis is a long-standing fund manager with many strong attributes in place which support long term active fund management according to their contrarian investment approach.

In 2016, we evaluated several changes which the business had implemented to the portfolio management process and incentive structures. While these changes were intended to produce a better end-result for clients by bringing the firm’s best stockpickers closer to client assets in order to create a greater sense of ownership and engagement, we found it to be a significant change which needed to be monitored over time.

Following our review in 2021, we concluded that the changes made to the process may work against the long-standing performance outcomes which Orbis has delivered on. Historically Orbis has demonstrated a strong ability to position size investment ideas in their portfolios, and this aspect is what led us to downgrade the fund to Tier 2 during June 2021.

Since then, we have seen a leadership change at Orbis with William Gray handing over day-to-day leadership of the firm’s investment team to Adam Karr, Orbis’ US equity manager and head of the US region at the time of the handover. In addition, Adam became ultimately accountable for the Global Equity fund. Adam has since driven a change to the way portfolio management responsibilities in the Global Equity fund are shared.

That is, the fund has moved from having five portfolio managers (four regional and one global sector) to three global portfolio managers. The three global portfolio managers are Adam Karr, Ben Preston and Graeme Forster.

As previously mentioned, prior to managing the Global Equity fund, Adam was the US regional portfolio manager, while Ben was head of the Global Sector team. In addition, prior to the most recent change both Adam and Ben were responsible for managing slices of the Global Equity fund. Lastly, Graeme has been a long-standing portfolio manager on the Optimal and International strategies.

Brett Moshal, Stefan Magnusson and Ed Blain, who were responsible for slices of the Global Equity fund will focus on regional exposure in Japan, Emerging Markets and Europe respectively.

On the whole, we feel that the change makes sense and will likely be beneficial for end investors. Although significant, we have gone through a process with Orbis of understanding the reasons for the change and assessing the abilities of the three current portfolio managers. We do think that Adam and Graeme will have to make an adjustment when broadening their remits to global ones, but ultimately, we feel that this is a step in the right direction. As a result, we retain our Tier 2 rating and await further evidence to assess the change made.

Along with the change announced to the portfolio management process for Global Equity, two separate team changes were made that affect the Orbis Global Balanced and Orbis Optimal funds.

On Global Balanced, Mark Dunley-Owen has been added as a portfolio manager to the strategy and will work alongside the current portfolio manager, Alec Cutler. Mark was previously a portfolio manager at Allan Gray in South Africa and relocated to Bermuda in 2020 to join the multi-asset team.

Regarding the Optimal strategy, Graeme Forster has overall accountability for the strategy. Povilas Dapkevicius from the Global Sector team was introduced to the strategy in 2021 and started managing a slice of the portfolio. Recently, Matt Adams of the US team, Neha Aggarwal of the European team and Alex Bowles from the Japan regional team have started directing client capital alongside Povilas.

We are currently in the process of assessing both sets of changes for the Global Balanced and Optimal strategies and will communicate our rating views in due course.