Focus On Investment Opportunities In UK, Japan, Korea – Orbis Investments

Alec Cutler, portfolio manager of the Orbis Global Balanced Strategy, discusses why there is value in the UK market, the case for defence stocks, opportunities in the energy transition and a review of the fund’s performance, at the same time as looking at investment opportunities in Japan and Korea.

At a media event in London this week, Alec Cutler of Orbis Investments
underlined the case for investing in UK, Japanese and Korean
firms, saying that they are undervalued markets.

Cutler is heavily overweight in the UK, Japanese and Korean
markets, slightly overweight in Europe and very underweight in
the US. “We favour UK mid-small caps,” he added.  He is not
alone in his views. Graham Ashby, UK all cap fund manager
at investment manager Schroders, also believes now
could be a good time for investors to increase their exposure to
UK shares. Frédérique Carrier at RBC Wealth Management
thinks that there are opportunities in 2024, despite the
subdued economy, and recommends a market weight position in UK
equities. See more commentary
here. 

“We’re also still massively underweight in fixed income, with no
investments in the US, Europe, Japan or the UK,” Cutler told
the media briefing.

“Japanese banks have been fantastic for us…we have now rotated
out of Japanese banks into Korean ones,” he added. “We are also
invested in Japan’s Nintendo.” 

Orbis isn”t alone in favouring Japan and thinking that as a
result of corporate governance reforms and other measures, the
Asian country deserves more investor attention. See more
commentary
here on Japan. 

Cutler highlighted opportunities in the energy transition,
notably in upgrading the infrastructure. He also drew attention
to the role of cables, with 90 per cent of cable manufacturers
located in Europe. He invests in the cable manufacturer the
Prysmian Group as well as UK-based Drax, a renewable energy
company engaged in renewable power generation and the production
of biomass.

Cutler also emphasised the benefits of investing in gold, which
acts as an inflation hedge; he is 6 per cent invested in gold and
4 per cent in gold mining, including copper. The latest 2024
first quarter report by the World Gold
Council also reveals that total global gold demand was
up 3 per cent year-on-year reaching 1,238 tonnes, marking the
strongest first quarter since 2016. See more commentary

here about gold. 

Orbis Global Balanced Strategy

Cutler manages the Orbis Global Balanced Strategy which is a top
quartile performer across multiple time periods in its sector.

The fund seeks to balance investment returns and the risk of loss
using a diversified global portfolio. To do this, it primarily
invests in shares of publicly-listed companies and bonds issued
by companies and governments located anywhere in the world. It
can also indirectly invest in commodities. It targets
outperformance of the returns of its benchmark, 60 per cent MSCI
World Index with net dividends reinvested and 40 per cent JP
Morgan Global Government Bond Index (hedged into sterling).

Holdings include iShares Physical Gold, South Korea-based Samsung
Electronics, Taiwan Semiconductors, Japanese-based Mitsubishi
Heavy Industries, UK-based Drax Group, cable manufacturer the
Prysmian Group, and Siemens Energy focused on wind turbines,
energy storage and electrification of the industry.