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Our Investment Philosophy

  • 1
    Different Portfolios »
  • 2
    Different Performance »
  • 3
    Different Style Exposures »

Different Portfolios

You can’t expect to outperform the crowd if you are doing the same thing as everyone else. Stocks tend to have their biggest weighting in the benchmark when they are most expensive, effectively causing investors in a benchmark-driven approach to buy high and sell low. We seek to do the opposite. Driven by "bottom-up" stock selection decisions, our allocations to countries, regions and sectors can often deviate substantially from their benchmarks. As a result, the Orbis equity strategies typically have high tracking errors and high active shares. Our portfolio construction process ensures that there are no unintended exposures as a result of our bottom-up decisions, but apart from that we are comfortable holding very different portfolios. The graph below shows just how extreme our positioning can be at times. For example, the Orbis Global Strategy had a 40 percentage point overweighting in Japan in November 1998, yet was underweight Japan by a similar magnitude when the strategy launched in 1990.

Extreme historical exposures in Orbis Global Strategy vs FTSE World Index

Extreme historical exposures in Orbis Global Strategy vs FTSE World Index

Different Performance

We like to say that “outperformance does not come in a straight line”, but that doesn’t even begin to capture just how volatile our relative performance can be in any given quarter or year. Across the Orbis strategies, performance in the short-term has varied dramatically from long-term performance averages. One reason for this is that we try to identify shares that are temporarily out of favour for one reason or another, often due to highly visible short-term problems, yet we can never know how long it will take for those issues to be resolved or how the stockmarket will behave in the meantime. In the same way that we can’t time the stockmarket, we think it is equally futile to attempt to time the pattern of our relative performance. Clients should expect the Orbis Funds’ performance to be volatile in the short and medium term, while stabilising in a tighter range over longer holding periods. We view periods of underperformance, some of which can be painfully long, as the inevitable price we must pay for seeking attractive long-term returns on our clients’ behalf.

Orbis Global: Quarterly Relative Performance

Orbis Global: Quarterly Relative Performance

Past performance is not a reliable indicator of future results. Orbis Fund share prices fluctuate and are not guaranteed. Returns may decrease or increase as a result of currency fluctuations. When making an investment in the Funds, an investor’s capital is at risk. Returns are calculated gross of all income, net of expenses, and assume reinvestment of dividends. Net returns for Orbis Funds are calculated gross of all income, net of fees and expenses, and assume reinvestment of dividends.


Different Style Exposures

Our investment philosophy has never been about investing in fast or slow growth, in big or small companies, or high or low quality. As a result, our style does not fit neatly into any of the traditional “boxes” used to classify investment managers. While we have always been obsessed with value, we are not “Value” managers in the sense of limiting our search to shares with low price-to-earnings or price-to-book value multiples, or necessarily avoiding shares with higher valuation multiples. Instead, we always try to buy the most attractive shares in relation to their intrinsic value. As the opportunity set offered by the stockmarket changes, we may gravitate toward what others might call “Growth” or “Value”, but this is always an outcome of our process rather than our intent to favour one style over another.

Orbis Global Equity Strategy – Performance in “Growth” and “Value” Markets

Orbis Institutional Global – Performance in "Growth" and "Value" Markets

Past performance is not a reliable indicator of future results. Orbis Fund share prices fluctuate and are not guaranteed. Returns may decrease or increase as a result of currency fluctuations. When making an investment in the Funds, an investor’s capital is at risk. Returns are calculated gross of all income, net of expenses, and assume reinvestment of dividends. Net returns for Orbis Funds are calculated gross of all income, net of fees and expenses, and assume reinvestment of dividends.

Strategy returns represent combined returns for all Funds following the same investment objective. Strategy gross returns are asset-weighted actual gross returns of all the Funds following the same investment objective. Strategy net returns are based on the specified fee structure applied to the Strategy gross returns and do not represent actual net returns experienced by investors in the relevant Funds. Performance is calculated for the Orbis Strategy/Fund(s) specified.

Orbis Zero Base RRF class returns are based on an investment of US$100 million in the class at the inception of the Strategy with no subsequent transactions. Orbis Core RRF class returns are based on an investment of US$20 million in the class at the inception of the Strategy with no subsequent transactions. Orbis ICF class returns are based on an investment in the class at the inception of the Strategy with no subsequent transactions. The returns of an actual Member may vary depending on the timing and value of a Member’s subscriptions and redemptions.


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