ANCHOR GLOBAL EQUITY FUND

Raging Bull Award for the Best (FSCA-Approved) Offshore Global Equity Fund for straight performance over three years to December 31, 2022.

THE ANCHOR Group is a South African asset management company that offers a select range of unit trusts to investors, including an offshore range domiciled in Ireland and denominated in US dollars. Its Ireland-domiciled Global Equity Fund was launched in 2015, and the fund uses the MSCI All Country World Total Return Index as its benchmark.

The fund is aimed at the investor who can withstand the short-term volatility associated with a global equity fund in order to reap superior rewards over the long term.

Despite being down almost 23% (in US dollars) in 2022, it returned an annualised 12.6% over the past three years, keeping it at the top of its peer group (offshore global general equity fund approved to be marketed in South Africa) in rand terms and well above the 4% delivered by its benchmark.

The fund’s top holdings at the end of 2022 were (in alphabetical order): Alimentation Couche-Tard, Autozone, Berkshire Hathaway, Coca-Cola, CVS Health, Exxon Mobil, General Mills Inc, Hershey, Johnson & Johnson, and Pepsi.

Personal Finance put the following questions to portfolio manager Nick Dennis:

Please outline your investment philosophy/strategy regarding the Anchor Global Equity Fund.

ND: The fund’s mandate is largely unconstrained across sectors and geographies. That said, ideally I want to invest in “multibaggers”. These are companies (and shares) with the potential to increase by multiples of their current size. These are typically young, innovative, founderrun companies that are solving important problems in enormous markets. Multibaggers can be found in any sector, but over the last decade the most fertile ground has been in the technology space. However, growth shares need the right macro environment to work; when conditions are hostile, we aim to shift exposure to other sectors.

The year 2022 is one many investment managers would prefer to forget. Yet you managed to emerge “less badly” than many of your peers, resulting in your superior performance over three years. How did you navigate 2022?

Candidly, I am disappointed with the fund’s performance in 2022. The fund was fairly defensively positioned throughout the year, which helped, but I didn’t manage our exposure to the energy and materials sectors particularly well. On the one hand, the fund’s risk controls stopped the year being significantly worse, but with modifications, they could’ve made the year much better. I’ve worked on improving our risk management tools and processes, which should hopefully make the fund more robust prospectively.

Were there any high points during the year for you, or stocks that surprised to the upside?

For the most part, 2022 felt like an endless procession of downside surprises! In an otherwise challenging year, our positions in relatively “boring” companies like AutoZone and Hershey delivered solid performances, while Exxon Mobil was a big winner.

How are you positioning the fund looking forward, considering ongoing worries about inflation, interest-rate hikes and geopolitical risks?

The fund came into 2023 defensively positioned, which was unintentionally in line with the broad consensus. I came to the realisation that the biggest risk was that the fund wasn’t taking enough risk, given the one-sidedness of investor positioning and an improving macro backdrop. With a reasonably strong economy, falling inflation, and an end to rate hikes in sight, there appears to be a window where risk assets can do well. After suffering through a brutal two-year bear market and having fallen as much as 80% from their peaks, numerous growth stocks are showing encouraging signs of life. I’ve increased exposure to the growth space and plan to continue to do so as long as the elements align.

Portfolio manager at Anchor Capital, Nick Dennis, collects the trophy from Personal Finance editor Martin Hesse

Photo: Ian Landsberg