June 2026
Dear Investor
Broadening the investment universe of the Gryphon Flexible Fund
The investment landscape has changed considerably since the Gryphon Flexible Fund was launched in 2014. South African regulations now permit greater offshore exposure, the composition of the JSE All Share Index has changed, and the evolution of indexation has made a far broader range of global investment opportunities more accessible and cost-effective. Taking these developments into consideration, we believe the time is now right to optimise the flexibility the Fund was designed to offer.
We have therefore applied to the FSCA to reclassify the Gryphon Flexible Fund from the South African Multi Asset Flexible category to the Worldwide Multi Asset Flexible category effective immediately.
Under the new classification, the Fund will no longer be subject to the 45% offshore limit, allowing it to invest without restriction across local and global markets. The Fund’s investment philosophy, strategy and risk-focused approach remain unchanged. We believe this broadening of the investment universe will enhance the return potential of the Fund for investors.
The Investment Strategy
The Gryphon Flexible Fund’s dynamic asset allocation approach recognises the economic and business cycles as primary drivers of investment returns, and seeks to add value through asset allocation rather than individual share selection.
The Fund strategy involves a top-down, data-based approach, using macroeconomic indicators to identify investment opportunities across different asset classes as the economy moves through its various phases, such as expansion and contraction. Quantitative economic and business cycle analyses are used to identify the various stages of the cycle to provide a data-driven framework for investment decisions. These indicators guide us in dynamically shifting asset allocation between risk-on and risk-off positions in response to different cycle phases.
When the indicators signal an economic upswing, the Fund adopts a risk-on position, increasing exposure to equity and other risk assets in order to participate in the expected growth. During periods of economic downturn and uncertainty, it moves risk-off, reducing exposure to risk assets and allocating to assets intended to preserve capital.
This approach will not change.
Why Broaden The Fund’s Global Exposure?
When the Gryphon Flexible Fund was designed, South African funds could only invest 15% offshore. This significantly limited the Fund’s ability to differ from its sister fund, the Gryphon Prudential Fund, which follows the same investment approach but within the constraints of Regulation 28 of the South African Pension Fund Act.
Over time, the offshore investment limit has increased to 45%, while global investment instruments have become more sophisticated, accessible and cost-effective. Offshore exposure can now make a more meaningful contribution to the Fund’s diversification and return potential for investors.
The importance and prudency of diversification away from South African assets has been increasing over time because of various reasons.
The opportunity set within the South African market has narrowed. Changes to the methodology used in South African equity indexes tends to reduce the weightings of companies that derive most of their revenue and profits from outside South Africa. As a result the resources sector is now heavily concentrated in precious metals companies. Historically, the market offered broader exposure to diversified resource and rand-hedge companies, which allowed investors to benefit more broadly.
The South African economy has weakened structurally, partly as a result of mismanagement and prolonged underinvestment in infrastructure and productive capacity. At the same time, political risk has increased as political support has become more fragmented. Global markets provide access to other commodity-producing economies whose markets and currencies respond similarly to the global economic cycle, while potentially offering lower risk and volatility (economic and political) than South Africa.
Currency movements materially affect investment returns and reflect shifts in the global economic and commodity cycles. The Fund manages its offshore and currency exposures as an integral part of its asset allocation process.
What Will Change?
As opportunities arise, the Fund will be able to:
- Invest offshore without the current 45% limit.
- Access a broader range of global markets and asset classes.
- Diversify more effectively across countries, economies and currencies.
- Position its geographic and currency exposures according to the global economic and commodity cycles.
What Will Not Change?
The Fund’s core philosophy and investment process remain unchanged:
- Asset allocation remains the primary source of added value.
- Asset-class exposure continues to be implemented predominantly through cost-effective rules-based indexation.
- Investment decisions remain economic and market data driven.
- The Fund continues to pursue inflation-beating returns while carefully managing the associated risks.
The broader worldwide strategy will be implemented gradually, as and when value opportunities arise, and only as supported by the Fund’s indicators. It does not mean that the Fund will immediately shift entirely offshore or that South African assets will no longer form part of its portfolio.
What do investors need to do?
- No action is required from investors – if you have queries or concerns, please raise them with us.
Looking Ahead
For investors who require a Regulation 28-compliant solution, the Gryphon Prudential Fund continues to apply the same investment philosophy and strategy within the prescribed retirement-fund limits.
The reclassification of the Gryphon Flexible Fund creates a clearer distinction between the two funds, allowing the Gryphon Flexible Fund to fulfil its original purpose more effectively: responding flexibly to investment opportunities wherever they arise.
Abri Du Plessis Reuben Beelders
Portfolio Manager Portfolio Manager
