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Interview: Orbis' Marcel Bradshaw on 'democratic' investing

In addition, he highlights Orbis’s performance structure and the fact that employees’ own money is invested in the same funds, paying the same fees as clients. Mr Bradshaw explains: “We believe it’s fairer and is where our interests and clients’ interests are aligned. We are paid for performance and we also hurt if we underperform. 

“We’ve taken our D2C business out to the intermediary side, and you only pay for performance. There is no base fee. If we perform on benchmark we don’t charge anything; if we perform above benchmark we share [the outperformance] 50:50; and if we underperform we also share 50:50, so we pay back [into the fund] if we don’t perform.” 

He adds: “So far we have not seen anyone in the UK having that model, especially not a manager the size of Orbis. We are against just gathering assets, and we believe we need to grow by funds performing. We will only have merit and exist as a firm if we keep performing. Just gathering assets and getting bigger is not our aim.” 

Part of the consistent performance is the firm’s cultural approach, with no named managers on a fund. Instead, the portfolios are run by the investment team, which includes 40 global analysts. “The junior analysts have quite a high turnover: they become a senior analyst and then eventually own the right to allocate capital in the fund,” Mr Bradshaw explains.

“There are six portfolio managers that can allocate capital on the Global Equity fund. [But] we are already on the third generation of asset allocators, so there is no concern for the investor that there is any key-man risk. It’s important to grow our own talent and indoctrinate them in how we invest. This talent can then become more senior, and generation after generation we can produce this kind of performance.” 

Mr Bradshaw therefore rejects the idea that Orbis would ever hire in a new team to run a fund. “We would never do that. We tend to take them [junior analysts] from university but also from accounting firms,” he says. 

“They all run their own paper portfolio, and personal accountability is extremely important. They are going to either stay or [leave] the firm based on this paper portfolio. It’s not a question of us taking it lightly, it’s very scientific and that paper portfolio is make or break. It’s a very tough environment that they work in, and you will see  that our senior portfolio managers have very little turnover.”