Consistent outperformance: the Discovery Balanced Range signature
It was great to listen in to Louis Niemand as he explored the themes and opportunities for this year in the recent Q1 fund webinar. With so much going on in the world of global investing at the moment, I am reminded that when investing for the long term one needs to think long term.
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I’m proud to say that the Discovery Balanced Range of funds has performed exceptionally well since inception, delivering fantastic returns to our clients, as Louis demonstrated.
As Louis has described, no fund will consistently outperform over the short term and that the Discovery Balanced Fund, owing to its earnings revisions philosophy, is likely to underperform during inflection points in the market, as we witnessed recently.
Yet despite the difficulty of this last year, the Balanced Fund outperformed its peers 100% of the time over all five-year rolling periods and has provided an annualised performance that is significantly above its peer group average in the decade to end December 2022.
The Balanced Fund has?grown to become the fourth largest in an industry sector comprised of over 200 funds. I take pleasure in that fact and how it has also outperformed relative to peers more often that the three largest competitors in the space on a three-year rolling basis over the last decade.
Furthermore, it has achieved this outperformance while managing risk responsibly, with its worst period of underperformance over any three-year period being among the best, relative to peers. In Louis’s characteristic prose: “It’s fine to say that you play a Jonty Rhodes and just hit the ball all the time but it’s also important to understand that you must have a proper risk management process to ensure that when you underperform, you do not give away the farm.”
“That for me is the track record of the Discovery Balanced Fund and it’s contributed to the strong performance and to the strong earnings growth and the confidence that investors have given us”.
We like to refer to this long-term outperformance relative to peers, achieved while managing risk responsibly, and while following a unique investment philosophy that is exclusive to Discovery in the retail environment, the Discovery Balanced Range’s signature of consistent outperformance.
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This balanced approach to our Balanced Fund has generated a 9% annual return since the inception of the fund over 15 years ago, generating substantial real returns to investors while significantly outpacing the peer group average of the ASISA South African MA High Equity category.
Finally, it has always been a philosophy of mine that we, at Discovery, should never release a product to the public that we would not use ourselves. And so, when I am reminded that the teams at Ninety One are personally invested in the funds that they manage for us, I take great comfort that they will continue to deliver for our clients in the years to come.
As we move forward following the jubilance observed in the markets for the beginning of this year, while significant economic headwinds remain, so too do opportunities and the hope of a resurgence of growth leading into 2024.
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