The company was founded by Allan Gray, an investor who spent time with Fidelity before returning to South Africa in the mid-1970s to set up his own asset management business. By the late 1980s, Mr Gray wanted to manage money globally, something not possible from South Africa at the time, so Orbis Investments was established in London. It now manages about $30bn (£23bn) globally.
Mr Bradshaw notes: “The parent company has had a retail presence for a long time in South Africa, and at the moment is the biggest platform in the country and the biggest privately owned asset manager. Orbis Investments started a retail presence in Australia about 10 years ago, and recently started our retail presence in the UK.”
While Orbis’s flagship fund, Global Equity, has a track record dating back to January 1990, it is only in the past few years that the firm has started targeting the retail side.
Mr Bradshaw explains: “What’s important for us is that the environment is one that is correct for us as a company, what we stand for and our values. For example, we have never paid, and never will pay, rebates and as such pre-RDR the UK environment didn’t really suit us. With the RDR in 2012, it started making sense for us to look at the UK retail side.”
He points out that Orbis has been an institutional player since it began in 1989, but “a very passive institutional player. The institutional investors found us and invested with us, but as a retail player you can’t really be passive”.
One of the company’s founding principles was to democratise investments and offer the man in the street the same options as those offered to institutional investors.
As a result, Mr Bradshaw says that three to four years ago Orbis started on the retail side with a direct-to-client (D2C) business, which offers two funds – Orbis Global Equity and Orbis Global Balanced – to direct investors for a £1 minimum investment. “That’s currently branded as Orbis Access, but towards the end of the year we will look at having just one brand in the UK called Orbis Investments,” he adds.
He says the company’s process is not just about asset gathering. Instead, he highlights its alignment with clients through a different fee model, private ownership and a focus on nurturing its own talent.
Mr Bradshaw suggests the structure – which last year saw 85 per cent of the ownership transferred to a charitable trust, with the remaining 15 per cent held by management – underpins its contrarian, long-term, fundamental bottom-up stockpicking investment process.
“Being privately owned is absolutely vital: we can have our investment ideas and our commercial ideas, and we can take a long-term view of these things. If we are in the contrarian side of the market, which we believe is the undervalued side, it is possible for the portfolio managers to have contrarian ideas and not have career risk because we are privately owned.”
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.”
In terms of the UK, the plan is to raise awareness of the Orbis name, but also increase accessibility through both platforms and fund rating businesses.
“Accessibility comes via platforms. It’s a platform market, just like South Africa and Australia, so we understand it. At the moment we are on three platforms: Transact, AJ Bell and Raymond James. We are on two offshore platforms –, Canada Life and Old Mutual International – and we are finalising paperwork for more platforms. But getting there is hard work.
“Another important player in the UK intermediary world is the fund-rating business. With the [advent] of the RDR, the intermediary wants justification for why they choose this fund. So they say it’s rated on Morningstar or Square Mile, and so on.
“We’ve got some of it but not all of it. It’s a process of getting the demand, getting it on the platform, getting the ratings, and the more advisers use it the better the performance. It’s a process that takes time; it’s frustrating, but it takes time.”
While there are currently just two funds in the Orbis Oeic range, Mr Bradshaw points out the firm has a range of Sicavs covering global equity, global balanced, Japan, emerging markets and absolute return.
“Our strategy in the UK is very much solution-driven. We provide a solution for growth investors, which is the Global Equity fund. For moderate investors we provide Global Balanced. What makes sense for us is to look at something on the more cautious side.”
In terms of gaining traction in the UK market and convincing advisers, he admits it’s not easy because the firm is a new name.
“They haven’t lived with our performance, they haven’t seen how we outperform,” he says.
“Once you’ve experienced us and understand us, and once you know the faces behind the business, then we will start to get traction. Then we’re consistent, and we’re long term. We were 27 years in London before we opened our retail business in the UK, so we’re here for the long term.”
CV
Marcel Bradshaw
2017 – present
Head of UK retail,Orbis Investments
2015 – 2016
Head of international sales,Old Mutual Wealth
2010 – 2014
Managing director,Glacier International, Sanlam
1994 – 2009
Old Mutual
