Investing

Allan Gray’s Global Equity fund’s exceptional performance

Allan Gray

Allan Gray’s Global Equity feeder fund significantly outperformed the MSCI World index and FTSE All-World index over the last year.

The Allan Gray Global Equity feeder fund gives South African investors offshore exposure through the Orbis Global Equity fund without needing to convert funds into foreign currency.

It allows investors to make an investment in ZAR which is then converted into foreign currency at the prevailing rate and invested in the offshore fund.

Once the investor withdraws the investment, the foreign currency is converted back to ZAR, and the investor receives the funds.

The Orbis Global Equity fund’s mandate allows it to invest in a variety of global shares, which the investment team identifies as being undervalued.

The Orbis team aims to identify shares that are out of favour in the short term while posing promising long-term prospects. 

The fund attempts to outperform global stock markets over the long term and uses the FTSE All-World index as a benchmark for its performance.

The FTSE All-World Index represents the performance of large and mid-cap stocks from developed and advanced emerging markets within the FTSE Global Equity Index Series.

The FTSE All-World index has 63% exposure to the USA, and the remainder is split between stocks from other jurisdictions.

The Allan Gray Equity fund has 46% exposure to the USA, 22% to Europe, and the remainder is split between Asia and Japan.

To analyse the performance of the Allan Gray Equity fund, Daily Investor compared it to its benchmark, the FTSE All-World index, and the MSCI World index.

If R100 had been invested in the three funds since 2017, the Allan Gray fund would have yielded a return of R170.

It is significantly higher than R151 for the MSCI World index and R146 for the FTSE All-World index.

The Allan Gray Fund delivered an annualised return of 9.32% over the last six years, compared to the MSCI World’s 7.08% and FTSE All-World’s 6.46%.

The fund is slightly riskier, with an annualised holding period standard deviation of 17.33% compared to 16.95% and 15.93%, respectively, for the MSCI World and the FTSE All-World indices.

However, it delivers a lower risk per unit of expected return at a coefficient of variation of 1.67% compared to the MSCI World’s 2.05% and the FTSE All-World’s 2.12%.

It should be noted that Allan Gray’s Global Equity feeder fund’s fees of 1.17% are higher than a passive index tracker fund, like the Satrix MSCI World ETF, which charges 0.35%.

The Orbis Global Equity fund has delivered strong performance compared to two worthy benchmarks.

It offers a convenient and easy way for South African investors to gain diversified offshore equity exposure via the Allan Gray Global Equity feeder fund.

MeasureAllan Gray Global Equity MSCI World indexFTSE All-World index
Annualised return9.32%7.08%6.46%
Coefficient of variation1.67%2.05%2.12%
Standard deviation17.33%16.95%15.93%

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