Rise and fall

tampedes out of funds are not unusual. I can remember the panicselling of Guardbank (now Stanlib) funds 20 years ago, and oldguard businesses such as Sanlam have seen assets drift down. But the loss of confidence in Foord Asset Management beats any of these. In 2018, Foord Balanced was the single largest loser as R8.9bn was pulled out. It was hardly a red-letter year for rival Coronation either, yet its balanced fund had less than R300m pulled out.

Frankly, any investor who pulls out of a balanced fund after a 3.7% loss for the year should be in something a lot

Srel symbol, It could build so much more capital on the roguish but highly original character of its founder, Dave Foord, while emphasising that the key risk is manageable as there are some other competent managers such as William Fraser and Daryll Owen.

One thing’s for sure, hiring Foord provides more diversity than hiring one of those corporate clone managers at its larger competitors.

I was pleased to receive an article from Paul Cluer, Foord’s CEO. Foord is positioned for a recovery in financial markets that should precede any real improvements in the economy. It should be embarrassed at picking more than its fair share of failures — the industry reduce gearing or raise liquidity. And while all shares tend to rise in bull markets, not all shares drop in bear markets. Shares with better earnings quality and certainty and visible real earnings growth stand out from the pack.

A recovery portfolio?

Cluer believes that investors should be able to cope with depressed returns for a year to 18 months before the turning point, when gains will be at their highest. So does Foord Balanced look like a recovery portfolio?

Its main property pick, Capital & Counties, worked quite well — it is up 6% over a year while its former sister company Intu is down 41%.

Foord had big holdings in two of the 2018 “bombs” — Aspen and British American Tobacco — but it would have been much in line with peers on Naspers, Sasol, BHP and RMB Holdings.

Foord Balanced has a 17% investment in the Foord Global Equity Fund, which is run out of Singapore. It doesn’t follow the same “recovery portfolio” approach and includes what must surely be shares still at bull market prices such as Tencent and Alphabet (Google) and the hi-tech pharmacy business CVS Health.

I would hate to see Foord drift off every consultant’s buy list.

Remember that Allan Gray nearly went out of business in 1997/1998 on poor performance. It has since become a large and obscenely profitable shop.

I would be reluctant to steer other people’s money towards Foord until I have a clearer sense of its plans. But Foord Flexible, a fund which has absolutely no restrictions, is probably still worth a small allocation.