Beyond the slogan: Where real investment insight lives

Investment markets often distil complex realities into memorable phrases that travel quickly and stick easily. These narratives can be useful as shorthand, but they can also mask where value and opportunity really lie.

John Biccard, veteran portfolio manager of the Ninety One Value Fund, has long suggested that the more widely accepted a view becomes, the more it warrants scrutiny. In many instances, consensus thinking is precisely what gives rise to mispricing.

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Take the global alcohol industry as an example. The narrative that alcohol consumption is in structural decline has led to weak sentiment towards companies such as AB InBev, Rémy Cointreau, Pernod Ricard, Brown-Forman, and China Resources Beer. As a result, many of these businesses are now trading at valuations that suggest a prolonged or even terminal decline.

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While shifts in consumption patterns are real, the balance of probabilities does not necessarily support such a severe outcome. For a disciplined value investor, this disconnect between perception and underlying fundamentals can present an attractive opportunity.

Reflecting this, the Ninety One Value Fund has built a meaningful allocation to selected spirits and beer companies within its offshore portfolio.

A similar dynamic has played out closer to home. In the period leading up to South Africa’s 2024 general elections, local equities were widely regarded as “un-investable”.

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This pessimism was reflected in deeply discounted valuations across many domestically focused businesses. Taking a contrarian view, the Value Fund increased its exposure to SA Inc shares leading up to the elections.

Following the formation of the government of national unity and an improvement in political stability, even modestly better-than-expected outcomes led to a significant re-rating in these stocks.

The fund subsequently took profits as this positioning played out and has since selectively rebuilt exposure in areas where valuations remain compelling.

Currency markets – the ‘weak rand’

Currency markets provide another example of how entrenched narratives can be challenged. For many years, South African investors have become accustomed to a steadily weakening rand. This experience has reinforced the perception that the currency is a “one-way bet”.

However, shifts in global conditions can alter this trajectory.

A period of stronger commodity prices – South Africa’s key exports – combined with lower oil prices (that is, until the recent Middle East conflict), improved the country’s terms of trade and supported the rand.

As a result, portfolios positioned exclusively for continued currency weakness have faced headwinds.

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Historical precedent also serves as a reminder: during the commodity super-cycle of the early to mid-2000s, the rand strengthened materially, contrary to prevailing expectations at the time.

‘US exceptionalism’

The notion of “US exceptionalism” offers a further illustration. In recent years, US equity markets have significantly outperformed global peers, supported by robust economic growth and strong corporate earnings. However, this performance has coincided with substantial fiscal stimulus, with the US running elevated budget deficits between 2020 and 2023.

At the same time, a small group of large technology companies – the so-called Magnificent Seven – has driven a disproportionate share of market returns.

This raises important questions about sustainability, valuation, and concentration risk.

As a result, there are early signs that global investors are beginning to reassess allocations, with capital gradually rotating towards more attractively valued emerging market opportunities.

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Even the widely held belief that “markets are efficient” and that active managers cannot consistently outperform deserves scrutiny. While it is true that many active managers struggle to deliver excess returns, it does not follow that outperformance is unattainable.

The Ninety One Value Fund, for example, has delivered an annualised active return of approximately 1.7% after fees since inception in 2000 and has outperformed its benchmark over multiple time horizons.

The key challenge for investors is not whether active management can add value but rather identifying managers with a disciplined and repeatable process.

Ultimately, outperforming the market requires a willingness to be positioned differently from the consensus. This is reflected in the fund’s investment approach, as Biccard prefers to buy out-of-favour, undervalued stocks which may lag the rest of the market for long periods. He is comfortable that valuation opportunities may take time to pay off.

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His current positioning reflects this philosophy. It has almost no exposure to expensive US equities, is constructive on emerging markets, and sees significant value in selected South African companies and the rand.

Globally, it also finds opportunities in areas such as consumer staples, including segments of the alcohol industry where sentiment remains subdued.

Read: Top South Africa fund manager sees 2026 non-resource stock rally

The broader lesson is clear. Investing is a complex and adaptive process that cannot be reduced to a single narrative or slogan.

When a market view becomes widely accepted and easily summarised, it is worth asking what assumptions underpin it – and what might be overlooked. In many cases, the most compelling opportunities arise precisely where conventional wisdom goes unchallenged.

Paul Hutchinson is sales manager at Ninety One.