Volatile markets are good times for fund managers

At an investment presentation recently, David Foord, director of Foord Asset Management said that he thought the market volatility induced by the sub-prime mortgage defaults was just a teaser for a future, much bigger shake out.

'But that doesn't concern me as the Foord investment process does better than our competitors in down markets,' he said. 'We will be ready to choose the bargains'.

In addition to managing the Foord Equity Fund, the Foord Balanced Fund and the Foord International Feeder Fund David Foord also runs the Nedgroup Investments Value Fund.

Along with Allan Gray, Regarding Capital Management and newcomers Orthogonal Investments, Foord has a long term, absolute value philosophy. This means that he tries not to lose money and compares his performance to a cash return, not to the performances of his peer group.

Foord tends to have highly concentrated, high-conviction portfolios. He also has the highest average holding period of shares in the industry. 'When I buy a share, I buy at the lowest price and do not have an exit strategy. I plan to hold the share forever,' he says.

Over the last 23 years the Foord funds have performed at 26.4% per annum, compared with the JSE FTSE All Share of 18.3%, an outperformance of 8%. Over the last 10 years, Foord has outperformed the JSE FTSE All Share by 16.3% and over the last five years by 9.3%.

This type of performance is not merely a flash in the pan. Allan Gray’s Equity portfolios have also handsomely beaten the JSE FTSE All Share over the last 10 years by 14.3% and over the last 5 years by 13.2%.

This vindicates our view that active fund management clearly outperforms indices in South Africa.

Silke Financial Services has the skill and expertise to structure a well-diversified investment portfolio of stocks and/or bonds, precluding the need for you to select and manage the individual stocks yourself.

Have a great week.

If you have any queries regarding the above commentary please contact us on 021 683 3380 or info@silke.co.za