Rone Swanepoel, Head of Distribution at Morningstar Investment Management SA

Markets have always loved a good story and 2025 has offered no shortage of them. From artificial intelligence, geopolitical turmoil, interest-rate speculation, emerging market resurgence and macro shifts, investors have had plenty to react to globally. Yet behind the noise, one constant has quietly shone through - the value of sticking to a disciplined, valuation-led process.

For Morningstar Investment Management, that principle is embedded in everything we do. And nowhere is it more evident than in the Morningstar Global Fund range, which celebrates its first anniversary with a strong record of performance, proof of process, and an approach that earns a truly global badge.

In a year marked by market swings and shifting sentiment, all three Morningstar Global Funds, Cautious, Balanced, and Growth have outperformed their EAA (Europe, Asia, Africa) peer group averages.

• Global Cautious Fund: +7.3% vs +5.8% peer group
• Global Balanced Fund: +11.6% vs +8.3% peer group
• Global Growth Fund: +15.8% vs +13.1% peer group

The performance shows how an active, valuation-driven, global allocation can add meaningful value, even over shorter time horizons. Our focus isn’t on predicting where markets will go next; it’s on building robust portfolios designed to withstand in a range of scenarios.

The Funds’ outperformance demonstrates this. Each portfolio reflects active decisions by our 400+ strong global research and investment team; whether that be across region, sector, currency, and style factor.

• Emerging Markets have been standout contributors, led by China (up 24% in Q3, +45% Year To Date) and Latin America.
• Japan has delivered solid gains (+8.4% in Q3), with an overweight maintained as valuations remain compelling and the yen deeply undervalued.
• UK equities and Emerging Market debt have also played a key role, benefiting from attractive yields and currency dynamics.
• Deliberate underweights to expensive US tech and large caps have helped cushion drawdowns, while selective exposure to communication services and healthcare has supported performance.

Source: Morningstar Direct as at October 2025

The Funds are deliberately underweight North America (around 62% versus the MSCI ACWI (Morgan Stanley Capital International All Country World Index) at 68%, reflecting Morningstar’s view that US valuations overall are relatively high but pockets of opportunity with the US remain.

We’re pragmatic, we still want exposure to world-class US companies, but we’d rather access them through diversified routes where valuations screen attractive. Beyond equities, the Funds have also benefited from fixed income positioning. Opportunistic allocations to UK Gilts (+9.5% Year To Date) and Emerging Market Debt (+18% Year To Date) have proven particularly rewarding. Currency diversification has been another lever we have had access to in a fund structure and the Funds are currently underweight the US dollar and overweight undervalued currencies such as the yen and pound, with exposure also built through Emerging Market local debt. This approach has added a real layer of protection and differentiated returns in a year of dollar weakness.

In closing

Behind every decision lies Morningstar’s global asset-allocation engine, a framework refined over decades and used across portfolios around the world. Each position is assessed using a ten-year valuation lens that blends expected yield, earnings growth, and reversion to fair value. This helps the team identify where the best long-term opportunities lie, while avoiding short-term market timing. That global insight allows the South African-based team to tap into Morningstar’s deep global research network, leveraging the same intellectual capital used across the group’s multi-asset strategies worldwide. Advisers often ask what makes a truly global portfolio. For us, it’s not just where the assets sit geographically, it’s about how we bring together insights from every corner of Morningstar’s investment network to make better, evidence-based decisions.

The one-year anniversary of the global funds’ marks more than just a performance milestone. It’s also a reflection of the broader evolution of Morningstar Investment Management’s South African business. Over the past year, the team has continued to deepen integration with our global teams, expand our research infrastructure, and enhance our discretionary fund management offering to better serve advisers and investors. The goal, as always, remains simple, to deliver independent and consistent outcomes while giving South African investors access to the same thinking and tools that power Morningstar portfolios globally.