A protection-first approach to long-term returns
A useful way to illustrate the value of a conservatively managed, long-only multi-asset strategy is to remember that a 40% decline requires a 67% recovery, while a 50% loss requires a 100% gain just to break even. The art of ‘winning by not losing’ was up for discussion during the first of five Glacier International Roadshow events, held in Johannesburg recently.
Growth, protection and volatility
“Glacier is all about growing and protecting your wealth, which is very sensible in these volatile times; we are more about protecting than growing,” said Fritz von Westenholz, Business Development Manager at Troy Asset Management, during a 20-minute trip to the podium. He framed the discussion around protecting investors from market drawdowns and volatility, sharing a slide that compared his brand’s Multi-asset Strategy against the MSCI World Index, in British pounds, across each of the major market collapses since 2000.
For example, during the 2001 dotcom bust, the MSCI World fell 44% compared to a 3.8% drop in the strategy; during the 2008-9 Global Financial Crisis (GFC), global shares lost 38.8% while the strategy fell just 13.7%; and following the 2025 US Liberation Day debacle, global investors suffered through an 18.2% dump against a 3% hiccup. “We are going to fall when markets fall, but our aim is to not to go down too much,” Von Westenholz said. He described the strategy as boring, offering a ‘tractor on a motorway’ analogy to illustrate the slow-and-steady approach to portfolio returns regardless of market cycles.
The roadshow was overshadowed by unprecedented geopolitical, macroeconomic and market risk. Aside from trade tariffs, fund managers and investors were battling the fallout from the expanding Iran-Israel-US conflict; concentration and valuation concerns in global and US shares, especially where exposed to artificial intelligence (AI) and technology; and what the presenter described as “a difficult time” for private credit. Concentration risk was on naked display, with just 10 companies, including eight tech plays, making up 41% of the US S&P 500.
Dotcom-level valuations
The non-tech firms in this list include diversified conglomerate Berkshire Hathaway and the world’s largest bank, JPMorgan Chase. At these levels of concentration, investors in passive index tracker funds become overexposed to a sector or theme. “This is a very unusual situation; even at the height of the dotcom boom in early 2000, only a quarter of this index was made up of the top 10 companies,” Von Westenholz said. He noted that US equities, which have delivered spectacular returns over the past decade or so, are trading at similar valuations to those at the height of the dotcom bubble, based on cyclically adjusted price earnings (the CAPE Ratio).
An active fund manager mitigates concentration and valuation risk by finding companies with compelling valuations, unconstrained by geography. In this case, the presenter noted holdings across a universe of global brands that will be familiar to South African investors, including Alphabet (Google); Heineken; L’Oréal; Microsoft; Nestlé; and Visa. Von Westenholz shared a slide showing that each of these companies was cheap versus its long-term average. Framed differently, only two of the aforementioned S&P 500 top 10 make compelling valuation cases at current prices.
“We are finding pockets of good valuation, but generally, the market is pretty expensive,” he said, before using a world map to show the geographic spread of the underlying revenues across the strategy’s equity holdings. North America dominates at 47%, followed by Asia-Pacific (20%), Europe and the UK (20%), Latin America (7%) and Africa and the Middle East (6%). The focus is on developed Western economies, and Asian exposure is typically through Western-listed companies.
A near-systemic debt crisis
There is a growing cohort of economists and fund managers who are in awe of the US market’s ability to ignore the country’s near-systemic debt and debt-servicing issues. As the Nasdaq and S&P 500 indices surge ahead, the country’s annual net interest payments roughly exceed 25% of US federal government receipts. So, while the US’s total tax take is around USD5 trillion annually, up to a trillion of that is sucked up to service interest on its debt. Debt will become more of an issue as the US is likely to spend billions of dollars on the conflict with Iran.
Gold and trade tariffs featured strongly during the macro discussion. Before commenting on prospects for commodities, Von Westenholz noted that under President Donald Trump, the US average effective tariff rate was at its highest level since 1936. “The stock market has not really reacted to these tariffs, and that is something to be pretty worried about,” he said. The Troy Multi-Asset Strategy does not use derivatives, so it opted for gold as an offset for the current equity market exuberance.
Troy has a long record with the precious metal, making purchases as far back as 2005, at just USD425 per ounce. Some interesting points were made about gold price volatility. To begin, the pullback from record highs of over USD5000 per ounce to around USD4400 was described as unusual given the instability in the Middle East. “We still think gold is in a bull market,” Von Westenholz said. But he warned that inflation and interest rate forecasts had been disrupted by the conflict.
Explaining gold’s lustre
The factors that pushed gold to record highs are still in play over the longer term, including record central bank buying that kicked off around the time of Russia’s invasion of Ukraine in early 2022. Central banks, especially in Asia, are reweighting to gold due to concerns that dollar assets could be sanctioned or even confiscated. Gold also has an established track record of acting as a hedge against global equity market drawdowns and the initial shock of geopolitical events.
To underline the protection-first approach, Von Westenholz shared the strategy’s current asset allocation for April 2026. The preferred mix is equities (40%), bonds (28%), gold (10%) and cash (22%). Over time, the strategy has held as little as 2% and as much as 13% in gold. “We took some profits in gold earlier this year,” the presenter said. “We had 15% in it at the end of January and sold a third of that at about USD5100, so we have now got about 10%, which we think is a decent exposure for our portfolios.”
However, over the past 25 years, equities have chipped in with the major return lift. The idea is to keep plenty of dry powder (bonds and cash) to scoop up equities when valuations become compelling. “When we are really excited, when we are really bullish, we have had up to 70% in equities,” Von Westenholz explained. The last time this happened was following the Lehman Brothers collapse during the GFC. Equity allocations also rose during the COVID-19 market crash and the 2025 Liberation Day correction.
Best return-volatility outcomes
Protection is key, as evidenced by the Troy Multi-asset Strategy’s 7% annualised return since inception, with a maximum drawdown of 13.7% versus 44.7% for the MSCI World. Sliced another way, the strategy has delivered 7% versus 8% annualised for the MSCI World, with 6% volatility compared to 14%.
For closing context, the Amplify Global Flexible Fund (AGFF) applies Troy Asset Management’s long-only multi-asset approach. AGFF is described as aiming to protect investors’ capital and grow its value in real terms over the long term, with a minimum five-year horizon.
Writer’s thoughts:
The most intriguing part of reporting on this presentation was trying to figure out the management structure behind the featured Amplify fund, with MLC Global, Sanlam and Troy all cracking a mention. Are you comfortable with the detail shared in offshore fund fact sheets? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
