The start of 2025 has been characterised by uncertainty and volatility spreading across the globe. Every morning of late has felt like a new episode of a drama series, and I think it’s safe to say that market conditions have provided more than enough material for comedians. Statements like: “It’s gonna be great,” “I’m very highly educated. I know words, I have the best words,” and “I’m the best. I mean, I do this stuff better than anybody” have become the new norm (again) as Donald Trump reclaims his seat in the White House. As entertaining as it may be at times, markets have not taken it lightly. In my view, a power struggle has ensued, with Trump attempting to reassert his dominance on the global stage—leading to increased geopolitical tensions, tit-for-tat tariff talks, and a wave of unintended complications that, while foreseeable, few may have anticipated.
We all know the saying that the only certainties in life are death and taxes. And while markets tend to rise over the long run, it is in times like these that an investment house’s philosophy and process are truly tested. 2024 was a difficult year for the Arysteq Global Opportunities Fund (“the Fund”), with anything and everything tech-related driving market returns. We had little exposure to the Magnificent 7 stocks, which ultimately accounted for 15.7% of the MSCI World Index’s (“the Index”) 20.1% return in 2024. There was only one word to describe how our investment team felt: pain. We constantly reminded ourselves of our strategy, and discussions about our philosophy and process became even more prevalent as the pain trade persisted throughout the year. But we persevered.
While some of the businesses that rallied over the last year would have been great additions to the Fund as high-quality stocks, we were not comfortable with the prices at which they were trading. 2024 taught us some hard lessons that have helped refine our decision-making process and improve our execution of strategy.
Earlier this year, a colleague referred to The Queen’s Gambit, and almost immediately, we saw the connection between this classic chess move and the Fund’s experience over the past year and a half. The Queen’s Gambit is a well-known opening strategy in chess, involving the sacrifice of a pawn to gain control of the centre of the board. It embodies fundamental chess principles, such as securing central control and establishing a strong pawn structure—making it a popular choice among players for centuries. Similarly, we had to sacrifice short-term returns, go against the herd, and remain steadfast in our philosophy and process.
The Fund’s strategy has always been to take a risk-adjusted approach—investing in quality stocks at the right price to drive long-term, sustainable returns for our clients. We have always known that during periods of strong market returns, the Fund may underperform, while in significant downturns, the impact on our portfolio would be less severe. This was true in 2024, and even more so in 2022, when the Index returned -11.1%, while the Fund returned -5.1%. Fast forward to 2025, and we are seeing a similar pattern unfold in the markets. As of 24 March 2025, the Fund had a year-to-date positive return of 4.4%, compared to the MSCI World Index at -2.4% and the S&P 500 Index at -5.0%. This again highlights the value of being invested in a well-diversified fund that experiences less volatility than the overall market—particularly in uncertain times.
In recent weeks, we have been ensuring that the Fund is correctly positioned to take advantage of market dynamics and invest further in the high-quality positions in our portfolio that we see as undervalued. With the exchange rate currently at ZAR18.17 to the US Dollar, the Fund’s price-to-earnings ratio at 13.4x versus the Index’s 20.6x, and the Fund’s dividend yield at 3.0% compared to the Index’s 1.8%, we believe the Fund is well-positioned to drive sustainable returns in the long run.
