I had a stopover in humid Singapore so it made sense to catch up with Foord Asset Management’s global office. Foord is one of SA’s top 10 balanced managers, outperforming far better resourced teams such as Stanlib and Old Mutual over the past five years.
It has had the same chief investment officer, the maverick Dave Foord, since it was founded in 1981. Dave doesn’t call himself a growth, value or momentum manager but an empirical (or perhaps Imperial) pragmatist.
I passed the opportunity for rum and sea biscuits on Dave’s yacht as I had the chance to meet his team in the air-conditioned comfort of the firm’s city centre offices. Foord SA operates out of a Pinelands mews house. By contrast, the Foord Singapore offices could be straight out of Suits — only without Meghan Markle, or at least not on the day I was there.
They are by no means spacious. Dave doesn’t forget that he is managing clients’ money, not his own — though I assume the firm runs most of his own money too.
Foord understood the concept of risk management long before most of its peers. The first and second rules of fund management are “Do not lose clients’ money”. It’s no accident that the firm wasn’t investing in the next cool company during the 1997/98 dot.com boom.
Foord is at its most comfortable managing funds with an inflation-beating benchmark. These include the (SA domestic) Foord Flexible Fund and the Foord International Fund; the International Fund has a benchmark of US inflation plus 3.5%. The fund makes up about 30% of Foord’s total assets under management.
Dave’s thinking is against industry orthodoxy but in line with common sense. He says that risk is not day-to-day volatility — why would it be in the 40-year life cycle of building capital for retirement? He defines it as risk of a permanent loss of capital. Diversification is an important part of risk management, he says. But thank goodness he avoids that dreadful cliché “diversification is the only free lunch in investment”.
Foord International has, in industry jargon, become more “risk-on” over the 12 months to September 30, increasing the equity allocation from 46% to 60%. While competitors might be upweighting fixed interest now that rates are increasing, Foord has reduced the cash allocation from 31% to 16%, offset by just a tiny increase in government bonds from 9% to 10%.
It was important for me to meet the international team when they could speak freely and where the conversation wouldn’t be dominated by the firm’s powerful founder. Dave certainly has his own brand of charisma.
I get to meet the Cape Town team, particularly Nick Balkin and Nancy Hossack, quite regularly. So it was good to meet Dave’s co-portfolio managers on global equities, Ishreth Hassan and JC Xue. Dave’s other partner in crime, Brian Arcese, double hats on business development, so he was out of town.
One of the reasons that Foord portfolios are so difficult to pin down is the multi-counsellor approach, in which each portfolio manager is responsible for their section of the fund.
It’s true that Allan Gray also has a multi-counsellor approach. But the big difference is that almost all Gray portfolio managers are products of the Allan Gray investment training. They have the same view of the world. The Foord global team all have very different backgrounds and cultures.
Apart from Dave (who is from Zimbabwe originally, anyway) there are no SA expats in the Singapore office. They did find room for an Australian, however, called Stuart Wilson. This isn’t the actor who had the difficult task of playing Helen Mirren’s boyfriend; this is a much younger man who analyses the discretionary, staples and healthcare sectors for the firm.
It looks as though Dave plays a more hands-on role in the international fund, and not just on the asset allocation side, which has always been his first love.
There are quite a few materials shares in that fund — the kind of shares anyone who cut their teeth on the JSE would know well, such as copper producer Freeport-McMoran and Wheaton Precious Metals. Alibaba, the Chinese online giant, is there but it’s the ninth-biggest share in the fund.
By contrast, the young bucks get a freer rein in the Foord Global Equity Fund, in which the top five shares are tech-related. They are JD.com, Tencent and Alibaba from China, TSMC from Taiwan and Alphabet as the largest Western share in the fund.
• Cranston is a former associate editor of the Financial Mail.
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