The Allan Gray Equity Fund had a relatively good 2022. In a year when most assets lost value, the Fund returned 7.8% in rands and 1.1% in US dollars. This was ahead of the benchmark, which returned 5.4% in rands and -1.1% in dollars.

There were significant shifts in the global environment, as world events changed the fortunes of a number of sectors and asset classes. In particular, it seems like the tide has turned for government bonds, technology stocks and cryptocurrencies. Here are some price moves that caught our attention at year end:

Global equity markets sold off. The MSCI All Country World Index and the S&P 500 were both down almost 20% for the 12 months ending December. The local Capped SWIX All Share Index fared much better but was still down 2% in dollars.

Technology stocks sold off a lot. The Nasdaq Composite was down 33%. Amazon became the first public company to lose US$1 trillion in market capitalisation and its share price halved over the year. The price of Tesla dropped 65%. By contrast, Naspers returned 7% in dollars over
the year.

Developed market bonds sold off. Investors in the US 30-year bond lost a third of their money by year end. Pound investors in the UK 30-year gilt lost more than 60%. This happened because inflation in developed markets hit levels not seen since the early 1980s.

The price of Bitcoin fell by 64% over 2022. It is down 75% from its peak. At least nine crypto companies went bankrupt in 2022. The largest was FTX, whose previous CEO has been arrested for fraud.

Despite the high rate of inflation, the war in Ukraine, and Xi Jinping consolidating his power in China, the dollar gold price was broadly flat over the year.

The Chinese property market continued to weaken. October and November 2022 saw the average price of a new home fall near 2% year-on-year. More concerning, however, is the value of new homes sold which was down 28% for the 11 months to November, relative to
the prior year.

Turning to South African stocks:


It was a year to own banks. The sector delivered good returns in 2021, and these continued in 2022. Absa provided a total rand return of 35% for the year and Standard Bank gave 28%. Capitec has underperformed the banking index in only five of the past 20 years, and 2022 was one of those: The stock returned -6%.

Glencore was the top contributor to the performance of the Fund, delivering a total return of 50% in 2022.

Woolworths, another stock we’ve held for a long time and a top 10 holding in the Fund, returned 33%.

The Fund doesn’t hold Aspen, which was down 38% for 2022. This was another contributor to relative performance.

Two of our top detractors during 2022 were Life Healthcare (down 28%) and Old Mutual (down 15%). Relative performance was also hurt by being underweight BHP and Shoprite.