When we set up the Orbis SICAV Global Balanced Fund 10 years ago, we wanted to do a conventional thing in an unconventional way. Our aim was to generate pleasing returns with a moderate risk profile. That’s conventional. But rather than looking to asset class decisions as the key driver of returns, we built the strategy to draw on our core skills: in-depth company research and bottom-up security selection.

At inception, we knew what we thought of the opportunity set in 2013, but we did not know what the market would throw at us over the next decade - let alone the environments future generations of investors will face over the next 50. Given that uncertainty, the Fund has always had wide flexibility in its asset class exposures.

Not because we want to tactically flip between equities and bonds, but because we never want our clients to be stuck holding unattractive securities simply to meet an asset class target. For us, the key question has never been how much of the portfolio to have in equities or bonds but which equities and bonds are attractive enough to win the bottom-up competition for our clients’ capital.

Ten years later, that concept has been borne out - a bottom-up approach to multiasset investing can work. That is not to say returns since inception have been up to our standards. They haven’t been, and over the long term we believe we can deliver significantly higher relative returns than clients have experienced thus far. But encouragingly, security selection has been by far the biggest driver of relative returns

Both asset class exposures and our individual holdings have evolved substantially over the past 10 years.

At inception, the biggest overweight in the portfolio was to technology stocks.
The second largest was to telecommunications companies, which represented
five of the top 10 holdings. Energy holdings were just 7% of the portfolio, similar to
the exposure of the benchmark. Over 85% of the portfolio was invested in selected
equities, with just 10% in fixed income, and nothing in sovereign bonds.

Today, technology and communication services are among the biggest underweights
in the Fund while energy and industrials are the largest concentrations. Around 75% of the portfolio is invested in our favourite shares with nearly 20% in fixed income and just under 10% in sovereign bonds.

As the opportunity set has changed, so has the portfolio - reflective of our active approach. The three greatest shifts have been the rise in bond yields, the dominance of the US stock market and the wide disparity in the price of cheap versus expensive businesses.