Return to our ‘Roots’
Returning To Our ‘Roots’ – Edinburgh & London 2025
In 2016, we held a view that if we were going to build a business that was the custodian of wealth for South African families, we needed to develop a global perspective that was reflected in the investment portfolios we would create. We believed strongly that we didn’t want to construct international portfolios with South African fund management names only, while knowing that there were global managers with outstanding insights, teams and track records that we were ignoring. The consequence of this thinking was to set out on a fund manager research trip to London to get first-hand experience of the landscape. Armed with no clients or assets, Fundhouse somehow managed to facilitate some extraordinary engagements with global asset managers – many of whom are still included in our portfolios today. Fast forward 9 years and these international research trips continue to be an important part of our investment process. In the interim period, we have had several visits to the UK, US and China and in September of this year, returned to ‘our roots’ with a visit to Edinburgh and London.
As usual, the trip was expertly put together by the Fundhouse team whose reputation and relationships enable us to meet with companies that would be impossible on our own. We travelled with the owners of a number of independent wealth businesses and have entrenched relationships that have developed and evolved as we spend more time together. As we have said before, our businesses should theoretically be competitors, but the entire trip is characterised by deep engagements, learning and sharing. We all see ourselves as ‘challenger brands’, believing strongly in the value of independent advice and the amount that we learn from each other as we walk between meetings, chat over lunch or a beer at the end of the day are priceless (even if the beers do cost R220 each!). This part of our journey is the ‘uncovered gem’ that adds as much to our world as the manager meetings themselves.
Our trip started in Edinburgh and we were fortunate to spend time with the team at Baillie Gifford – a manager we have held in our client portfolios for many years. They are a fascinating organisation: 117 years old, yet incredibly progressive and investing in growth companies that you may think would be the domain of a firm without that kind of history. What you quickly realise though is that everything about what they do is aligned to their style. From the people they employ (often with very diverse backgrounds to challenge conventional thinking) to the investment philosophy to the detail of how they run their meetings. They have been early adopters of some of the most transformative technology businesses in recent times and have the discipline to stay invested and handle volatility – if they still believe in the fundamentals of the business. In addition to the BG team, we met with Walter Scott who follow a quality style, Lion Trust who are equity managers with an impact/ ESG underpin and Lang Cat who provided us with insights on the UK wealth management industry. Our first day was rounded out with a cold beer at the legendary Café Royale and a standup comedy show at the renowned ‘Stand’ comedy club. Comedy in normal accents is funny but is somehow funnier in a Scots accent!
After a comfortable train ride through the countryside of England, we arrived in London for a packed agenda of meetings and engagements. As a number of locals repeatedly told us, “London is not England”. The inference being that London is booming with retail, tourism and consumption seemingly growing unabated, despite the challenges of lower growth, lower house prices and inflation experienced throughout the country.
The next three days were a whirlwind of logistics & meetings as we criss-crossed the city to meet with fund managers from various businesses across a range of asset classes. Included in this group were EQT – the 2nd largest private equity manager in the world, Brown Advisory, Contrarius (both equity managers, but with contrasting styles) and Oaktree – one of the largest credit managers in the world, founded by Howard Marx. Although we currently don’t use any of these managers, the diversity of thinking and styles presented us with significant food for thought and challenged the status quo. In our opinion, the most challenging and interesting of these was the thesis presented by one of the managers on the investment case for Tesla. They spoke about the Tesla ecosystem, the integration of technology, software and product as well as their perceived lead in race for the robotaxi/ autonomous driving market. In fact, this thinking was extended to the concept of ‘Sustainable Abundance’ whereby (in summary) the robots do the work and pay the tax while the humans are retired but continue to live a comfortable life funded by the tech companies. This transition to autonomous driving also has significant implications – both socially and for businesses that are the incumbents. Talk about challenging conventional thinking!
In addition to these ‘explorative’ discussions, we met with a number of managers who have existing positions in our portfolios. These include Coronation Emerging Markets, Fidelity and Schroders. At Schroders we were lucky enough to meet with the Global COO/ CFO of the Schroders group, who happens to be an inspiring Capetonian, Megan Burnett! However, the main reason for the morning spent with them was to engage with the Global Recovery Fund team following some changes to the team’s leadership. As part of Fundhouse’s robust research process, whenever there are changes of this nature, they want to understand what the implications for the team and the ongoing decision making will be. Were they reliant on an individual, or do they have a team culture whereby they will continue to deliver exceptional returns. As we sat with the long-time team member and now head PM for the fund, Simon Adler, we were impressed with his clarity of thought, process followed, support from the firm to bolster the team and determination to drive excellence.
As you may expect, we went out of our way to ensure that we had a ‘well rounded’ experience in the UK. We preceded our meetings in Edinburgh with a few days of golf, based in the seaside town of Gullane – 45 minutes east of Edinburgh. The area is known as Scotland’s ‘golf coast’ where one classic links merges into another. We were fortunate to play 3 great courses and were hosted by a Scottish legend of the area who was incredibly hospitable. We played Dunbar (established in 1856) and Gullane #1 (1884), but the highlight was a Saturday at Muirfield – ranked #6 in the world by Golf Digest. The experience was something we will remember for the rest of our lives as we were given a brief glimpse behind the curtain of the members-only establishment. The members play foursomes only (where you hit alternate shots) and then retire to the dining room for a large carvery and several bottles of wine, before heading out for another 18 holes of foursomes in the afternoon. As our host said, the perfect day at Muirfield is split 2 ½, 2 ½, 2 ½. When I enquired further he said it is 2 ½ hours for golf in the morning, 2 1/2 hours for lunch and wine and 2 ½ hours for golf in the afternoon! It really is a special place.
We watched a great show in London, enjoyed some excellent food & wine and can confirm that the pub culture is alive and well. We gritted our teeth and closed our eyes at the £5 coffees, £9 beers and £65 steaks! All of these serving to remind us of our good fortune to live at the beautiful (& affordable) Southern tip of Africa.
In conclusion, the ‘return to roots’ tour will go down as one of our most enjoyable research trips to date. It reminded us of the importance of remaining curious and seeking out a world view. It reinforced the need for balance in our lives and the value of investing in relationships – both with the people managing our clients’ money and those we view as partners in this journey. We look forward to sharing more of the detail with you as we engage in the coming months.
All the best,
Paul & Andrew