Speaker 0:
Hello and welcome to this Insight session today. I'm joined by Andrew Burner, chief investment officer at private clients by old mutual wealth. Welcome back, Andrew.

Speaker 1:
Thank you and good to be here.

Speaker 0:
So, Andrew, perhaps you can take us through who? Private clients by old mutual wealth is. And who are the types of clients that you manage segregated mandates

Speaker 1:
for sure. So the business, you know, we sit within old mutual wealth as the name suggests, and we're actually 10 years old, I think October this year. So we take a holistic view, I suppose, of of an individual's wealth, you know? So it's not just about,

Speaker 1:
you know, portfolio management, but it's about. And also not just worrying about, you know, what's happening today, but also what's going to happen tomorrow, you know? So we look, you know, from an advisory perspective, fiduciary, uh, perspective, you know, wealth, administration, access to global markets, and then obviously portfolio management. And that sits, you know, underneath, uh, my portfolio and, you know, within portfolio management. We obviously do.

Speaker 1:
You know, we have a a focus yet very comprehensive range of portfolio solutions. Uh, ultimately targeting the high the you know, high net worth individuals and and up to your ultra high, uh, ultra high net worth. Um, so we manage, you know, local portfolios, global portfolio,

Speaker 1:
uh, single asset class, you know, local equity, global equity and, uh, multi asset class for different risk profiles. Um, you know, so your R 28 top portfolios, which are your pension or pro fund, uh, type portfolios and then two global balanced, uh, portfolios so fairly comprehensive range here.

Speaker 0:
So, Andrew, you're the co co portfolio manager on the global equity portfolio. We've previous previously spoken about the global equity portfolio, which is benchmarked against the against the MS. C i World index. What are some of the changes that you've brought into, um, this portfolio, Andrew.

Speaker 1:
Hm? Yeah, that's a That's a very good question because, you know, managing portfolios is slightly different to, you know, managing a fund or unit trust. So you've got to have a a much more longer term focus, you know? So we're in the business of buying businesses, not trading shares. You know, there's obviously tax implications for for clients. So when we're buying, you know, into a business or a share of of a business. You know, typically, we're focusing on, you know, 10 year

Speaker 1:
plus holding periods, you know? So if you look at our turnover, it's very, very low, so changes don't happen often. You know, to give you an example. Last year, there was only a single change in in the portfolio. But if I think about a recent, you know, change or a recent, uh, a change R v MH immediately jumps to mind, I'm sure. You know, uh, many of you are familiar with V MH. If you're not familiar with V. M, you'll be familiar with some of their brands.

Speaker 1:
Uh, you know, Christian Dior. Uh, Louis Vuitton. Uh, you know, per Hennessy, you know, watches hablo you can go. And I think they've got, like, 75 houses. It's the world's biggest, uh, luxury business.

Speaker 1:
Um, and, you know, and led by, uh, who's now the world's richest man. Bernard. Uh, ana. And he's, you know, very much in the mould of a Berkshire Hathaway. You can almost think about uh, l v MH as the luxury brands. You know, Berkshire, Berkshire Hathaway, you know, very conservative when it comes to fiscal monetary policy that he likes to invest, you know, against the cycle he's built a fortress. As Buffett has at at, uh, at, um,

Speaker 1:
uh, Berkshire Hathaway. He thinks inter generationally, you know, he is not short term at all. And that resonates highly with our philosophy. And unsurprisingly, you know, in the market turmoil that we've seen, if you go back to the beginning of last year, you know, V MH has actually done superbly. Well, um, which is what we were expected to do in such an environment. Um, so that's you know, I suppose that's one that jumps, uh, to the top of my mind when you talk about, you know, what are some of the changes that's happened?

Speaker 0:
So you've mentioned before that you've decreased your tech exposure. Is there any specific reason as to why? And then there was another company that you mentioned, and that was Honeywell. What is the value proposition of this company?

Speaker 1:
Yeah. So, you know, we could almost talk to to both those questions hand in hand. Um, you know, so tech exposure. You know, we've been quite heavy in tech. Um, you know, And when I talk about tech, you know, every company When you talk about technology, what is technology? You know, it's, you know, it's it's actually a verb, you know, You take, you know, one good. You use some technology and produce a better good. Uh, but some companies use tech.

Speaker 1:
Other companies actually produce it, you know? So thinking about your Microsoft of the world, your apples, et cetera, I'll consider those tech companies people like on those a bit valuations, uh, and loss of the weight in, in in the portfolio. But then if you go across to the other side of of the equation, you've got your old economy type businesses such as a honey, for instance, that these companies are actually busy digitising at a very, very rapid rate. So they're employing,

Speaker 1:
you know, technology into their process into their business. Um, you know, and when you look at all the layoffs that are happening in the tech space over the last, you know, 6 to 12 months, um, you know, most of those, uh, tech employees are moving out of, you know, the pure tech players into the likes of your honey worlds, as they, you know, try and digitise uh, their processes.

Speaker 1:
So it's a really nice play. You know, you you've got the old economy type companies that are still very important. Very often investors have forgotten about them. Yet they're employing that, uh, that technology.

Speaker 0:
So, Andrew, I know you mentioned Berkshire Hathaway. Um, earlier. I know that you've also built quite a sizable allocation to this one company. Doesn't this raise concern for concentration? Risk?

Speaker 1:
Yeah. So Berkshire is by far our biggest, uh, holding in the portfolio. It's a high conviction call at the moment. Um, you know, But, uh, Berkshire is not a single company. You know, you can look at Berkshire. You know, it's far more diversified than probably most of your unit trust that you're gonna find out there. You know, uh,

Speaker 1:
it's got operational businesses, you know, it's got energy companies. It's got the real, uh, businesses. It's got a host of, you know, smaller manufacturing businesses. So you actually, if you buy a Berkshire, you 60% of the exposure that you get in is actually to underlying operating businesses that are operating in the real economy.

Speaker 1:
Um, then they've also got a listed portfolio, you know, and the listed portfolio they've built up over many, many years and that, you know that includes, you know, its biggest holdings, apple that has grown fantastically well over, you know, over recent years. Um, but they've got a lot of banking exposure in there. Um, you know, So you're getting a very diverse exposure by buying, uh, by buy Berkshire,

Speaker 1:
you know, And, um, you know, as a result, you would expect it to to be very well behaved in a portfolio which which it is, you know, So you you're not introducing risk by by having a fairly hefty weight in in in a company, like so

Speaker 0:
from a geographical perspective, how are you allocating between major developed and emerging markets and what has informed your geographical exposure?

Speaker 1:
Yeah. So look, our our portfolio is a pure developed markets, uh, portfolio. So we're not investing directly into emerging markets now. So the the three regions, I suppose, is, is North America, Europe and then, uh, the developed markets in Asia, which is predominantly Japan.

Speaker 1:
Um, and we've got exposure, obviously, to to all of those we do get exposure to emerging markets. Um, through the companies that we invest in, you know, so obviously multinational businesses many of them, you know, growth drivers coming out of Asia, You know, not just China, but India, Southeast Asia, Indonesia. Um, you know, and companies already spoken about L v MH. We know the impact that the Chinese consumer you know, investors at home with richmont has seen what RICHMONT has done. You know, as China has reopened,

Speaker 1:
um, on the expectations of their consumers, um, you know, other companies jump to mind L'Oreal, uh, sits in our portfolio also, you know, strong growth driver coming out of, uh, out of Asia and emerging markets in in in general, you know, Nike, et cetera. So, whilst not allocating directly into emerging markets, which sometimes can have liquidity issues and what not we can get the exposure to the emerging market consumer through these businesses. Yeah.

Speaker 0:
So, Andrew, you've, um, accumulated quite a sizable cash allocation. Um, how are you looking to deploy this cash once? Um, real rate starts, uh, moderating.

Speaker 1:
Yeah. So the portfolio is not an asset allocation portfolio, you know? So we're not trying to make asset allocation calls and saying Let's build up a cash position, You know, rather, it's just come about as we've lightened, uh, certain positions within the portfolio. So you mentioned tech. You know, techs. We haven't exited any technology orientated business, but we've taken some weight off of them, and that's resulted in, you know, us sitting with a bit of cash. Uh, we have a

Speaker 1:
sold one or two other businesses, uh, in in recent times, you know. So our cash sits at about 56% at the moment, which is very high for pure equity portfolio. We actively looking to deploy that cash looking for opportunities and as they present themselves, you know, we we will deploy that, um, you know, but there's no, you know, there's no rush. It's not burning a hole in our pocket by by any stretch of the imagination, but we will deploy it when that opportunity arises.

Speaker 0:
So when that opportunity does arise qualitatively what informs your investment

Speaker 1:
thesis?

Speaker 1:
Um, so, yeah, you know, qualitative and quantitative. You know, obviously, we we're looking at the fundamentals, so, you know, as as any investor will in valuation, Um, but qualitatively, you know, things that you know immediately jump to mind would be the management team.

Speaker 1:
You know, we need to, uh you know, See a management team that has a good track record of allo, of allocating capital. That's ultimately, you know what their their job is over time. He was also want to understand the business. You know, you really need to understand the business. What you know, what is its competitive advantage. You know, Buffet always talks about economic modes, but what is it,

Speaker 1:
Competitive advantage? What's gonna allow it to sustain its profitability? Its margins? Um, uh, et cetera, you know, So those, I suppose, are the two key points that immediately jumps out. When you think about the softer issues, you know your more subjective, qualitative issues as you, as as you ask

Speaker 0:
them. So, Andrew, what are some of the highlights that the Global Equity Fund has achieved most recently?

Speaker 1:
Um, yeah, so I mean that we got awarded. So the global equity portfolio has an exchange. We have the exchange rated note, which tracks the performance. It holds the exact same shares, same weights listed on the J. C um, and, uh, recently at the South at the South African listed, uh, tracker award.

Speaker 1:
It's It's got, uh, the three year for the, uh, the three year. The top performer over three years for your actively managed, uh, products on the J. C. Which is obviously something we we're very proud of. You know, it's had a really good, uh, performance for for many years now. Um, so that's, uh, you know, not, I suppose, fed in the cap for us.

Speaker 0:
Andrew, thank you very much for sharing your insights into the global equity portfolio that you manage.

Speaker 1:
Great, Chloe. Thank you. Uh, I appreciate it, and it was great to chat to you again.