A new way of investing
Omba is an investment manager based in London who manages global portfolios and funds for a range of investors from ultra-high net worth clients to independent financial advisors and discretionary fund managers.
The story behind the name Omba and the logo is an interesting one. The name “Omba” was derived by combining parts of the words “Ombu” and “Baobab”, the names of two impressive trees.
The Ombu tree comes from Argentina. They are particularly robust trees capable of sustaining temperatures from below freezing to near 40°C as well as surviving insect infestations. They are salt resistant and due to their massive water-storing trunks are able to withstand drought. There is ongoing research into the medicinal benefits of their seeds and leaves which are a rich source of several ribosome-inactivating proteins which could be used for treatment of fungal, viral and bacterial infections. Like the Ombu tree in Argentina, the Baobab tree of Africa is equally as impressive. Steeped in legend and superstition they are known for their longevity of up to 1500 years and are valued as sources of food, water, health remedies or as places of shelter. Their wide root span enables them to survive in dry climates. Their fruit is high in antioxidants, vitamins and calcium and is hailed in developed countries as a “superfood”.
As with trees, Omba has its own set of roots which are the foundation of our values. Our foundational values and principles include embracing technology, having a passion for the markets and investing, putting clients’ interests first and always being transparent. The trunk is the robust embodiment of our values. Finally, the leaves of the trees represent the growth of our portfolios over time and the fruits of our labour and investment acumen. The circular aspect to the logo signifies the “circle of life” and the fact that savings are most often multi-generational.
Omba has strong ties to South Africa. Of the six investors in London, five of them were born in SA and a further two team members are based in the country. Omba is committed to providing global investment solutions for fellow South Africans today and into the future.
We are a small and nimble team which stem from large organisations with financial services and technology backgrounds. We cater to clients from all over the world but base ourselves in London as we believe that being in one of the financial capitals of the world provides access to people, service providers, and information of the highest calibre.
Omba actively invests in global Exchange Traded Funds (ETFs). ETFs are instruments that replicate indices of countries, regions, sectors and themes across the globe. Based on our research and experience we believe the use of diversified ETFs serves investors well as they are inherently more diversified by number of underlying securities and they are also lower cost. Additionally, by owning ETFs, you naturally gain exposure to the largest, most liquid and tradeable companies in a particular region, country or sector. Smaller companies will in due course be included in these indices if they become more successful. Furthermore, less successful companies will eventually become smaller and be excluded from these indices. Investors therefore own the most successful and largest companies over time (i.e. a positive selection bias).
At Omba we also actively invest in smart-beta or factor ETFs. These are ETFs that invest in stocks exhibiting certain characteristics. This helps us to express a more nuanced view within a country or region depending on the macro and valuations environment. For example, rather than only owning the S&P500 for large capitalisation USA exposure, we can express a view on Value, Growth or Minimum Volatility stocks (amongst other factors) within the USA.
In more recent years, with the focus on long-term megatrends, thematic ETFs have become popular. We invest in thematic ETFs and spend a great deal of time ensuring that the underlying stocks are true to the theme – “purity”. We also want to avoid the fads and invest in sustainable themes which are not necessarily nascent but certainly not yet mature.
ETFs have become increasingly popular over the last 10 years, with total AUM presently more than $10 trillion.
The number of ETFs has grown to over 8,000 globally.
Some of the more familiar ETF issuers are iShares (Blackrock), SPDR (State Street) and Vanguard, but there are a further 70 global issuers with AUM above $500 million.
At Omba we are ETF specialists and not tied to any particular issuer. We assess the issuers and their ETFs using many criteria including: the issuer (track record and credibility), their ETF construction and tracking (how close do they replicate the market, sector or theme), cost, tax, trading & liquidity, and underlying security metrics (e.g valuations). In building a portfolio of ETFs, we run a very thorough risk process to ensure that our portfolios are robust and diversified. We look through the ETF into the underlying stocks to ensure that they are true to what the ETF represents. We also ensure that in combining a number of ETFs we are not overly exposed to any particular stock. Single stock risk (idiosyncratic risk) is not something we want to have in our portfolios. In our typical moderate risk portfolios, we hold more than 2,000 stocks and over 2000 bonds across equity and fixed income markets.
In keeping with our belief in diversification we allocate to global assets with a view that keeping diverse currency exposure over long periods of time provides additional diversification benefits. Our investment process tactically shifts clients into and out of regions, countries or sectors which we think offer better or less value at a particular stage of the investment cycle. We do not try to invest in the next “hot” theme as we believe the risk of being wrong outweighs the potential upside.
Our portfolios are all extremely liquid. We do not lock client funds into investments from which they are unable to withdraw. We do not invest in derivatives, nor do we short the market or use leverage. What we offer our clients is low cost, liquid, global portfolios which target inflation plus returns over the longer term. DM/BM
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