Reuben Beelders – Portfolio Manager

Megan Fraser – BD & Marketing

June 2023

What do the following chefs have in common (besides being chefs and being male)?

  1. Emeril Lagasse
  2. Jamie Oliver
  3. Heston Blumenthal

They all emphasize the use of a secret ingredient to elevate dishes.

  1. Known for his catchphrase “Bam!” and his vibrant approach to cooking, Emeril Lagasse encourages home cooks to experiment and find their own secret ingredient to add an extra layer of flavour to their recipes.
  2. Jamie Oliver, British chef and television personality, has mentioned the significance of secret ingredients in his cooking. He believes that a well-chosen secret ingredient can transform a dish from ordinary to extraordinary, adding depth and complexity.
  3. Renowned for his innovative and scientific approach to cooking, Heston Blumenthal has talked about the importance of secret ingredients and unexpected flavour combinations. He often experiments with unconventional ingredients to surprise and delight diners.

With this insight in mind and given the time of year (and the current sub-arctic temperatures), anyone planning to provide hearty, warming nourishment will be inclined towards a delectable, delicious soup. What would be considered the secret ingredient of such a soup?

Our research revealed that what is critical to any soup is often an ingredient that does not appear in the name of the soup. For example, in Potato Leek Soup, leeks and potatoes are important but it’s the chicken or vegetable stock, which forms the base of the soup and enhances its overall flavour. Seafood Chowder typically includes a variety of seafood, such as fish, shrimp, clams, or mussels but the unsung hero is the flavourful fish stock that serves as the base, infusing the soup with delicious flavours. While Italian Wedding Soup features meatballs, vegetables, and greens, the essential ingredient is the savoury base of chicken or beef broth.

In these examples the essential ingredient, the broth or the stock, is not explicitly mentioned in the soup’s name, but it plays a vital role in building the foundation of flavours and creating a delicious and well-rounded soup.

So…what makes a good soup is a good broth. What makes a good broth?

Start with high-quality ingredients, such as bones, meat, vegetables, herbs, and spices and add aromatic vegetables like onions, carrots, celery, leeks, garlic, and herbs to enhance the flavour profile. Simmering time; simmer the broth gently over a low heat for an extended period. This slow and steady cooking process allows the flavours to develop and intensify. The longer the simmering time, the more time the ingredients have to release their flavours and create a rich, flavourful broth.

Bottom line: a good broth takes time! No disrespect to Ina Paarman, but a good stock/broth cannot be hurried and cannot be substituted for convenience…simmering is required.

And just as a flavorful soup develops over time as it simmers on the stove, so investing requires patience and some form of simmering…so it is with our multi asset funds (you knew we were going to go there…).

Simply speaking, we have two modes of investing: risk-on and risk-off. Risk-on is simple; full-bodied, unadulterated and undiluted exposure to equities. The headline ingredient, equities via an index, everyone understands and appreciates.

Risk-off is a bit different. It’s a period that requires a form of simmering…constant vigilance and calm equanimity. The results of this stage may not be immediately apparent, but this is where our unhurried process works its magic and delivers the sustenance.

What are the ingredients of our wholesome, nourishing broth?

The components comprise the following: interest rates, commodity prices, global currencies vs ZAR, inflation, company earnings and business/economic cycle. Each adds their own flavour and benefit.

Interest rates: in order to appeal, bond yields must offer both a meaningful premium over cash as well as a better risk-adjusted return than cash in order to justify a shift in allocation. When moving into bonds, we replicate the duration of the GOVI index by holding bonds across the yield curve while simultaneously holding a portion (the short end of the yield curve) in cash – the funds, while replicating full exposure to bond, may not 100% actually invested in bonds.

Commodity prices: global commodity prices reflect the underlying economic growth and signal the expected direction of the business cycle, both locally and globally. Rather than classifying markets as Developed or Emerging, we identify commodity-based economies. With SA being a commodity-based economy, the ZAR reacts to changes in commodity prices. The transmission mechanism is generally via South Africa’s current account which reacts positively to stronger commodity prices and vice versa.

Global currencies vs ZAR: our currency tends to move in sync with other commodity-based currencies, such as the Australian Dollar. Any divergence from this behaviour might provide an opportunity for us to buy or sell foreign currency. There may, however, be times where this opportunity is more appropriately expressed in the bond market, rather than the currency market, as these two markets are closely related.

Simply put, our recipe book prescribes the following allocation at this time:

Our process has been tried and tested over time – our multi asset funds are into their 10th year and continue to deliver the wholesome nourishment expected from them.

How’s your soup?