By Erry Iipumbu
The first half of 2025 is now behind us. It was fast, loud, and rewarding for those who dared to embrace risk. As the dust settles, I have been thinking a lot about what it truly means to invest with pragmatic value at the core, a philosophy that avoids emotional swings and chases, but rather focuses on real returns, risk control and long-term value creation. Equities rallied across the board: the JSE SWIX climbed to over 16%, the NSX Local Index rose more than 10% and the MSCI Emerging Market gained 8.55%, while the MSCI World was up only 3.10% in Rand terms. The Rand has strengthened against the USD by 5.8%, inflation remained low, and portfolio managers targeting inflation+ returns appear to be winning what’s often called the “loser’s game”.
A measured Approach that Delivers
Having worked closely with pragmatic, value-orientated fund managers for years, 1H 2025 has once again reinforced my belief in their approach. Grounded in capital preservation and value discipline, their strategies often outperform when it matters most. Pragmatic value investing seeks value where it is justified, in low valuations as well as in high quality assets that offer sustainable earnings, strong balance sheets and a resilient business model, a moat.
Equity valuations in South Africa remain reasonable, (P/E around 14x, yields above 4%), but taking a closer look reveals markets still lacking breadth and depth in foreign participation. In the U.S., stretched valuations and narrow leadership concentrated in tech make equity risk less compelling. When sentiment alone is driving returns, this is where pragmatic value investors pull back and ask why fundamentals don’t match the momentum?
From where I sit, over the last 12 months, our pragmatic managers have stayed disciplined in their approach, maintaining a measured allocation to international equities, increased exposure to quality local assets, and a bond allocation that is built for durability. The approach is about taking the right risk, at the right time and for the right reason.
Fixed Income: Quietly winning
Fixed income markets have quietly delivered stand out returns, with South Africa’s ALBI returning 18.4% and Namibia’s ALBI delivering 13.7% over the past 12 months. While Namibia shares South Africa’s macro tailwinds, falling inflation expectations and stable policy rates, its yield curve remains consistently steeper. This reflects both liquidity premiums and credit risk premiums, but also a more aggressive domestic borrowing strategy.
Crucially, Namibian bonds are structurally priced off South African benchmarks due to the currency peg and monetary policy alignment. Yet, they offer a yield premium across all maturities, a spread that compensates for sovereign risk differentials while preserving currency stability. For investors with a medium-term horizon, this presents a rare opportunity: elevated real yields, rand-linked stability, and exposure to a structurally improving credit story driven by emerging oil, gas, and green hydrogen prospects. The case for locking in quality duration is growing stronger and is increasingly supported by both fundamental and forward-looking potential.
Pragmatic Value: Focused on the Cycle, Not the Quarter
We have seen firsthand how pragmatic value managers operate. With a focus on capital preservation and valuation discipline, they have consistently delivered strong risk-adjusted returns. Their information ratios are consistently strong, and their portfolios show low volatility, they aim to produce consistent, inflation-beating returns. Their measured stance on expensive U.S. equities, is not driven by bearish sentiment but by a disciplined commitment to fundamentals over market noise.
Meanwhile, peers with flexible mandates have chased returns, overweighting U.S. tech, and flipping aggressively between sectors. Yes, the two managers are always compared and ranked in the same category, but it’s not always an apples-to-apples comparison. When volatility returns, it’s the cautious managers who will be left standing. That is the approach we take: long term, disciplined and designed to endure.
Looking Ahead: Will discipline be rewarded again?
The real question now: Can earnings catch up with valuations? Will bonds continue to find support as inflation moderates? And can portfolios build on pragmatism and value continue to quietly outperform on a risk-adjusted basis? I believe the answer is yes. In markets like these, restraint is not underperformance, it is strength. Pragmatic value investing is not about being the loudest or the boldest; it’s about being consistent, informed, and adaptive. This approach may not lead the performance charts every single quarter but over a full cycle, this steady approach is what compounds into lasting wealth.
Erry Iipumbu is an Investment Analyst; SanlamAllianz Investments Namibia