Laura du Preez | 19 August 2025
Laura du Preez has been writing about personal finance topics for more than 20 years, including eight years as personal finance editor for two leading media houses.
Diversifying across asset managers with different ideas is now more important than diversifying across the investment styles of growth or value, local managers argued at a recent Sanlam Collective Investments conference held in Cape Town.
Three managers who either call themselves value managers or were previously labelled value managers, have funds on the SCI investment platform. They argued at the conference that they invest across all shares in the local market, rather than those labelled value shares, as long as they can buy them at a discount.
Delphine Govender, chief investment officer at Perpetua, Madelet Sessions, head of multi-asset at Denker Capital and Linda Eedes, investment professional at Foord, argued that strict style rules were inappropriate in the small local investment market and it is better to invest across managers with different ideas about opportunities in the market.
Growth and value styles were identified in the 1990s and local unit trust funds investing in equities were classified according to these styles until 2013, with the value style dominating among local managers.
But over the past decade the value style has been out of favour both locally and globally. While globally there are managers who still identify strongly as value managers, locally the label is used more loosely.
Delphine Govender, chief investment officer at Perpetua Investment Managers, says Perpetua does refer to itself as a value investor, and this simply means it seeks to invest in shares – and other assets - that are below the manager’s determination of its worth.
Govender says the two elements that are important are determining what a share is worth or its intrinsic value and this is based on reasonable estimates of the future cash flows of the business.
The second element is to buy it at a price that is discounted to that intrinsic value as it offers a margin of safety – share markets may rise or fall but if it falls this should not result in you losing on your investment because you bought it at discounted price, Govender says.
Sessions says value investors want to pay less for something than it is worth – they are trying to pay 0.99 or 98 cents for an asset that is worth a rand.
But this does not mean a value manager will buy anything that is undervalued. Sessions says Denker’s investment philosophy is to enter a partnership with the management of a company which Denker believes will make the right decisions and create value with the capital you invest in their company.
She says Denker likes to buy businesses that are quality ones and have a competitive edge that is hard to erode and provides a safety moat as they are protected from competition.
You don't really want to buy a business where somebody can come in and eat your lunch, Sessions said.
Eedes said Foord does not believe it is either a value or growth manager, despite being strongly identified as a value manager in the past. Foord believes there are many ways to make money and its portfolios include value shares and growth stocks, Eedes said.
She agrees that managers buy the future cashflows of the business, which may be stable but are also hopefully growing cash flows. She says Foord puts a lot of emphasis on earnings growth and dividends, because these two things make up the majority of long-term total returns.
Over the short-term, however, valuations (prices relative to earnings), have quite a significant impact and can erode returns, she said. Foord therefore tries to identify those businesses where the market has a different view on how those cash flows will turn out and to buy shares at valuations that make sense given what the manager expects the business will deliver in future.
Sessions said the distinction between growth and value styles is stale because people wrongly assume value investors would only look in the “dumpster” part of the market.
She said people believe value investors are like property buyers who confine themselves to buying in Johannesburg because the value per square metre of a three-bedroomed house is significantly less than the value per square metre of a three-bedroomed house in Constantia in Cape Town.
Sessions said people wrongly believe investment managers who prefer quality shares are like property buyers who only buy in Constantia, and growth investors are like property buyers who shop in George, because it's a very fast growing metropolitan area.
But Sessions said value managers are interested if there is an opportunity to buy a house worth R1 million in Johannesburg for R800 000 or a house in Constantia worth R15 million for R13 million. Similarly, if a house in George was for sale at less than the prevailing market values, it may also be an opportunity for a value investor, Sessions said.
A value investor does not have to look for opportunities in cheap markets only - there's value in all different markets and all different kinds of jurisdictions and types of companies, Sessions said.
Govender said value exists along a continuum. The South African market is small and its investment universe does not offer enough for managers to confine themselves to investing only in shares that are undervalued and expected to revert to their fair value when the value cycle is in favour.
Managers have to be pragmatic and invest across a value continuum which could mean buying a share that is considered a growth stock if it is available at a discount, Govender said.
Eedes said all managers believe they are buying something that is worth more than what they are paying for it, but it isn’t easy to know when the market will be in either value or growth cycle.
Foord prefers to fish where the fish are – to place more emphasis on the earnings and the dividends, but to also focus on macroeconomics, interest rates, where inflation is headed, geographies and sectors that might perform well, Eedes said.
Foord likes to buy at a low valuation, but this is not the best protection for an investor – your best protection is buying the good quality firm with good management, because even if you pay too much for that business it will grow, she said.
Sessions said she believes your best bet is to have as many skilled fund managers as 
possible in your portfolio. All managers make mistakes at times, but if you have a number of managers making a mistake at different times, you will still get the overall benefit of their skill, she said.
Govender agreed saying if you include six or seven skilled managers who are looking for really good ideas and opportunities in your portfolio, the odds of your investment’s performance will improve.
