A three decade track record that speaks for itself

In the constantly shifting sands of the investment landscape, a three-decade presence is a notable achievement – however, it should not just be longevity that impresses but rather the consistency of performance.

Recently, Foord Asset Management marked the milestone of an uninterrupted thirty years of managing retirement fund mandates.

Consider this scenario: Foord’s longest standing institutional client, the AJ North Pension Fund, which has been a Foord retirement fund client for 25 years, has earned a compound annual real return of 14.1% per annum (a nominal return of 21.6% per annum). The effect of such a premium return is profound with many AJ North staff members having retired to pensions that have exceeded their final salaries.

“This clearly exemplifies the profound benefits of Foord’s consistently outstanding long-term investment performance,” says Roger Carter of AJ North. “Foord’s approach, coupled with the avoidance of high cost structures, the appointment of a single manager and not being swayed by fads or trends has led to the almost unheard of scenario of our staff members retiring with more monthly income than they had whilst working.”

Over the last thirty years in which Foord has managed its retirement fund oriented Global Balanced investment strategy, the compound annual return has been an impressive 21.4% per annum. Over long periods, the creation of wealth must be measured in real terms (i.e. after inflation), and over the same thirty year period Foord’s real return has been 13.1% per annum. However, the greatest vindication of Foord’s ability has been the magnitude of the premium of those returns over the average pension fund for the same period: Foord’s Global Balanced investment strategy has outperformed the average pension fund in South Africa by 4.1% per annum (calculated using data from the Consulting Actuaries Survey up to December 1997, thereafter the average of the Alexander Forbes Large Manager Watch).

Stated differently, after thirty years, a Foord investor is almost three times wealthier than an investor in the average pension fund. The exponential-like return profile is illustrated in the following chart where the vertical axis has purposefully not been subject to logarithmic adjustment.

Chart 1: Return profile of Foord’s 30-year retirement fund track record

The most fundamental notion is not just that these returns were earned over the long term, but that they were earned consistently over successive long term investment horizons. Chart 2 below shows the inherent (and expected) variability of returns over each calendar year in this track record.

Chart 2: Short term return variability

Any long-term investor (exemplified no better than a retirement fund with its inherently long-term perspective) cannot possibly formulate appropriate decisions with this “noisy” information. Rather, better regard should be given to Chart 3 below:

Chart 3: Long-term return consistency

The longer time horizon reveals the consistency of the annualised ten-year returns (they move in a relatively narrow band) and the persistence thereof (they recur in successive periods). It is returns of this nature that are the hallmark of successful investing.

From inception to date (an indeed, into the future too), Foord has been (and shall continue to be) unapologetically focused on the long-term nature of investment returns.

Astute avoidance of any fickle preoccupation with the short term has safeguarded the appreciable returns earned by retirement fund investors in Foord’s portfolios. Consistent with Foord’s philosophy, the variability of short-term returns is not a basis for decision-making, but rather an opportunity to invest in assets that are valuable, but cheap, and to sell assets whose prices are in excess of their values.

Foord’s twenty-two strong investment team is characterised by considerable experience. The firm’s multiple counsellor approach to the management of its portfolios not only allows for the best investment views of the respective fund managers, but also illustrates Foord’s commitment to the long-term interests of its investors by the procurement of robust succession.