Question 05
Why should you trust us?
Check our incentives. Our bottom line is directly tied to the value we deliver for you.
We believe managers should earn their fees, not simply collect them. All of our Funds offer fee structures that have a refundable performance fee component.
Investment management has a “Heads I win, tails you lose” problem. Managers do extraordinarily well when they perform and really well when they don’t. They never really feel the pain. We go to great lengths to make sure that our interests are aligned with our clients’.
When we outperform, fees go into a reserve held for you, and when we underperform, refunds come back out of it to you. This ensures that our success is directly tied to yours. You'll struggle to find another structure quite like it, which says something about the industry's appetite for accountability.
Asset managers should earn their fees, not simply collect them.
“Heads I win, tails you lose.” Who in their right mind would take that bet? Sadly, the answer is most investors. Managers have stacked the odds in their favour most of the time, putting their interests ahead of their clients.
We reject this idea. Call us crazy, but we believe asset managers should earn their fees, not simply collect a toll. All of our Funds offer a refundable performance fee structure. When we outperform, a performance fee is set aside in a reserve held for you. When we underperform, we refund fees back out of that reserve. Upside and downside, shared. It's an unusual arrangement, and it concentrates the mind wonderfully. It ensures that our interests are aligned as our success is directly tied to the outcomes we deliver for clients.
Alignment should leave evidence
Clients also behave differently, in exactly the way you'd expect. The hardest moment for any long-term investor is the bottom of a bad market, when the urge to sell is strongest and the cost of selling is highest. A client whose reserve is paying refunds through that period has a reason to stay that goes beyond willpower, and fee refunds cushion the blow of underperformance. The evidence: in 2008, with global markets down 35% and no gates or lockups holding anyone in, we saw net redemptions of less than 10%. Our clients held their nerve partly because they knew we were also feeling the pain—and that was enough to get them to stay just a little longer until things started to improve. That’s what it means to be in it together.
“Heads I win, tails you lose.” Who in their right mind would take that bet? Sadly, the answer is most investors. Managers have stacked the odds in their favour most of the time, putting their interests ahead of their clients.
Asset managers should earn their fees, not simply collect them.
We reject this idea. Call us crazy, but we believe asset managers should earn their fees, not simply collect a toll. All of our Funds offer a refundable performance fee structure. When we outperform, a performance fee is set aside in a reserve held for you. When we underperform, we refund fees back out of that reserve. Upside and downside, shared. It's an unusual arrangement, and it concentrates the mind wonderfully. It ensures that our interests are aligned as our success is directly tied to the outcomes we deliver for clients.
Alignment should leave evidence
Clients also behave differently, in exactly the way you'd expect. The hardest moment for any long-term investor is the bottom of a bad market, when the urge to sell is strongest and the cost of selling is highest. A client whose reserve is paying refunds through that period has a reason to stay that goes beyond willpower, and fee refunds cushion the blow of underperformance. The evidence: in 2008, with global markets down 35% and no gates or lockups holding anyone in, we saw net redemptions of less than 10%. Our clients held their nerve partly because they knew we were also feeling the pain—and that was enough to get them to stay just a little longer until things started to improve. That’s what it means to be in it together.
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Past performance does not predict future results. The value of investments in the Orbis Funds may fall as well as rise and you may get back less than you originally invested. It is therefore important that you understand the risks involved and also obtain professional financial advice before investing. You should consider such funds’ Product Disclosure Statement (PDS) or Information Memorandum (IM), as applicable, before acquiring or disposing units in any Orbis Fund. The PDS or IM can be obtained from www.orbis.com. Target Market Determinations (TMDs) for the Orbis Funds can be found on our 'Forms' page under 'How to Invest'. Each TMD sets out who an investment in the relevant Fund might be appropriate for and the circumstances that trigger a review of the TMD.
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