Welcome to the Q2 review of Orion Investment Managers, during which the company experienced considerable and encouraging growth. Our funds and models have performed well relative to their benchmarks and versus the performance experienced in the first quarter. The local asset and investment management companies owned by Orion are:

Cadiz Asset Management, which is a specialist local fixed-income manager.

Starfunds.ai, which is a unique, rule-based quantitative manager.

Accorn Investment Management is a long-only, equity and multi-asset manager.

We have added a new D2 fee class (no performance fees) to both the equity and balanced funds and the new fee classes will replace the D class in the wrap funds.

Palmyra Asset Management is focussed on local equity, property, and multi-asset funds.

Capita Asset Management manages long-only, equity and multi-asset funds.

We received approval from the FSCA for the launch of our Capita BCI Global Equity Fund of Funds. Once the fund is available on the various LISPs, we will execute the switch.

Investin Asset Management, who manage long-only, equity and multi-asset funds.

International Personal Share Portfolio (PSP) Changes.

As communicated previously, we made changes to our international PSP models for our clients invested via Canaccord and PCS Old Mutual, these changes have meant that the performance of our international share portfolios have continued to improve relative to their respective benchmarks over the last quarter.

Due to the Trump ‘tariff tantrum’ impacting policy uncertainty surrounding the ‘on-again/off again’ tariffs, together with renewed US recession fears, inflation concerns, weaker consumer sentiment and heady equity valuations, Accorn elected to maintain our client’s exposure to ETFs, the weighting was unchanged at 60% iShares MSCI and 40% iShares Core S&P 500 ETF. Please note that this change was not applied to any International PSPs where a Discretion Limitation Addendum (DLA) prohibits such adjustments.

The allocation to the iShares Core S&P 500 and iShares MSCI World ETFs is aimed at reducing the direct equity allocation within the portfolios while maintaining the overall equity weight in the four models. The weights of the ETFs maintain our international PSPs geographic allocation to the US without specifically upweighting any direct equity.

The inclusion and the model weights of the ETFs are reviewed quarterly and may change depending on market conditions.

On behalf of the Orion Investment Managers Team, I would like to thank Warwick for the business invested in our funds and portfolios during the second quarter of 2025 and we look forward to your continued support during H2 2025.

Strategic Asset Allocation

Cash:

We are negative on cash as we do not believe it will achieve our hurdle rate of CPI + 3% in our low equity stable funds or CPI + 4% in our balanced funds.  We expect that the SARB will continue to cut interest rates over the next 12 months, our base case is for two 0.25% cuts in the second half of 2025. However, we do use cash to fund new opportunities.

Bonds:

Negative on inflation linkers with no exposure in our multi-asset funds and remain neutral on nominal bonds however we have lengthened our duration relative to the All Bond Index. Yields still look attractive but have compressed to about 9.80%, for a generic 10-year bond.

Local property:

Positive on property after the property index’s strong rally, and we did take some profits last quarter, and our new weight is 3.5% for our stable mandates and 7% for our balanced mandates. Property fundamentals remain relatively attractive, especially should we see further rate cuts by the SARB.

Local equity:

Neutral on local equity and have maintained our current weights in the various funds and we remain overweight industrials and resources while remaining underweight financials relative to their Capped Swix All Share Index weights.

Moving now to our international asset allocation.

International Cash:

We remain negative on global cash with the expectation that developed market interest rates will continue to be cut, but not as aggressively as originally anticipated. Our preference remains global equities over bonds.

International Bonds:

We are neutral global bonds with the expectation of only 2 rate cuts during 2025, probably only in Q4 of this year. Based on this view we reduced our exposure to longer duration bonds (those in the 10-20 year buckets) and remain shorter duration relative to our benchmark which is the Bloomberg Global Aggregate Index.

International Equity:

We remain positive on international equity maintaining our current exposure in our balanced mandates and low equity stable mandates with a preference to DM equities over EM and remain relatively overweight to the US, this overweight position has been maintained relative to the US’s weight in the MSCI World Index.

We believe that asset allocation has a major impact on fund performance, so we view and set our strategic asset allocation on a quarterly basis and amend our model portfolios and funds in line with our house view after each quarter. Remember that markets can be volatile over the short-term, and as history has shown, those who are willing to be patient and invest for the long-term will be handsomely rewarded.

In the meantime, I wish everyone in the Group a successful second half of 2025 and look forward to speaking to you in the coming weeks.