Seeking value primarily in developed markets worldwide

The global value portfolio is constructed from an equity universe composed of companies with market capitalizations typically greater than $1 billion located throughout the global developed and emerging market countries. Through rigorous, bottom-up company analysis, we seek to identify undervalued stocks with upside potential. The investment process comprises three stages: quantitative screening and initial analysis, fundamental research and portfolio construction.

Benchmark
MSCI ACWI
Inception
September 30, 2001
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Strategy overview

The portfolio managers discuss our Global Value strategy.

Portfolio managers

Fundamental Portfolio Manager
Fundamental Portfolio Manager
President
Head of Fundamental Research
Fundamental Portfolio Manager
Chief Executive Officer
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager

Performance

QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 1.0%16.5%58.6%10.9%11.1%10.6%10.7%
Strategy (net) 0.9%16.0%57.8%10.4%10.5%10.0%10.1%
MSCI ACWI 5.1%17.2%37.9%18.1%15.3%11.9%8.9%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 1.0%16.5%58.6%10.9%11.1%10.6%10.7%
Strategy (net) 0.9%16.0%57.8%10.4%10.5%10.0%10.1%
MSCI ACWI 5.1%17.2%37.9%18.1%15.3%11.9%8.9%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 0.9%15.4%54.6%7.9%10.5%11.7%10.7%
Strategy (net) 0.7%15.0%53.8%7.4%10.0%11.2%10.1%
MSCI ACWI -1.0%11.5%28.0%13.1%13.8%12.5%8.7%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 0.9%15.4%54.6%7.9%10.5%11.7%10.7%
Strategy (net) 0.7%15.0%53.8%7.4%10.0%11.2%10.1%
MSCI ACWI -1.0%11.5%28.0%13.1%13.8%12.5%8.7%
Fund 202020192018201720162015201420132012201120102009
Strategy (gross) 4.9%23.0%-10.0%18.8%8.7%-5.4%7.1%31.8%18.3%-0.2%19.8%41.7%
Strategy (net) 4.4%22.4%-10.4%18.3%8.2%-5.8%6.7%31.2%17.4%-1.1%18.8%40.5%
MSCI ACWI 16.8%27.3%-8.9%24.6%8.5%-1.8%4.7%23.4%16.8%-6.9%13.2%35.4%
Strategy (gross)
Strategy (net)
MSCI ACWI
202020192018201720162015201420132012201120102009
4.9%23.0%-10.0%18.8%8.7%-5.4%7.1%31.8%18.3%-0.2%19.8%41.7%
4.4%22.4%-10.4%18.3%8.2%-5.8%6.7%31.2%17.4%-1.1%18.8%40.5%
16.8%27.3%-8.9%24.6%8.5%-1.8%4.7%23.4%16.8%-6.9%13.2%35.4%

Portfolio (as of October 31, 2021)

Benchmark: MSCI ACWI
Asset Allocation
Strategy
Stocks 98.2%
Cash 1.8%
Strategy Characteristics
Strategy Benchmark
No. of holdings 53 2975
Weighted avg. market cap (US $MM) $123,700 $349,757
FY2 price/earnings 14.3 17.6
Price/book value 2.3 3.1
Dividend yield (%) 1.7 1.7
TOP 10 HOLDINGS
Security Country Percent
Rolls-Royce Holdings Plc United Kingdom 3.9%
Alphabet, Inc. United States 3.8%
Booking Holdings, Inc. United States 2.9%
General Electric Co. United States 2.9%
Novartis AG Switzerland 2.9%
Genpact Ltd. United States 2.8%
Samsung Electronics Co., Ltd. South Korea 2.8%
FANUC Corp. Japan 2.7%
Fiserv, Inc. United States 2.7%
Sanofi France 2.7%

A “weighted average” measures a characteristic by the market capitalization of each stock. Price/book ratio is the weighted average of the price/book ratios of all the stocks in a portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company’s per-share book value. The price/earnings ratio is the weighted average of the price/earnings ratios of the stocks in a portfolio. The FY2 P/E ratio is a forward P/E ratio using a next-twenty-four months EPS estimate in the denominator.

Holdings are subject to change.

SECTOR WEIGHTS
Sector Strategy Benchmark
Information Technology 21.5% 22.7%
Industrials 16.6% 9.6%
Financials 13.0% 14.4%
Health Care 9.4% 11.5%
Materials 9.0% 4.6%
Consumer Discretionary 9.0% 12.8%
Communication Services 8.4% 9.0%
Utilities 5.1% 2.6%
Energy 4.6% 3.6%
Consumer Staples 1.5% 6.6%
Real Estate 0.0% 2.6%
TOP 10 COUNTRIES
Country Strategy Benchmark
United States 50.4% 60.6%
United Kingdom 9.5% 3.6%
France 7.8% 2.9%
Switzerland 7.0% 2.5%
Japan 5.8% 5.7%
Germany 5.4% 2.2%
Italy 3.8% 0.6%
South Korea 3.7% 1.4%
Spain 2.7% 0.6%
Canada 1.6% 2.9%
Regional Allocation
  • North America 52.0%
  • Europe – other 36.1%
  • Pacific 5.8%
  • Emerging Asia 5.8%
  • Emerging Latin America 0.5%

Commentary (As of October 31, 2021)

Highlights

  • Global equities regained momentum in October as progress in vaccination campaigns appeared to have assuaged investor concerns over new mobility restrictions.
  • Though the company management teams we speak with are generally reporting higher input costs, we believe many supply chain issues should be resolved by mid-2022. In our view, if labor retains bargaining power, this may raise unit labor costs. We believe that the level at which inflation expectations get anchored should have the biggest impact on whether inflation is transitory or more permanent.
  • For many of our portfolio companies, we believe the earnings growth outlook is underpinned by pent up demand, strong balance sheets, and structurally lower costs than those prior to the pandemic.

Portfolio attribution

The Portfolio underperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the software & services, capital goods, pharmaceuticals & biotechnology, and technology hardware & equipment industry groups, along with an underweight position in the automobiles & components industry group, detracted from relative performance. Holdings in the consumer durables & apparel, utilities, and insurance industry groups, as well as an underweight position in the telecommunication services and household & personal products industry groups, offset some of the underperformance compared to the Index. The largest detractor was Takeda Pharmaceutical Co., Ltd. (Japan). Additional notable detractors included travel & tourism technology company, Sabre Corp. (United States), financial services technology company, Fiserv, Inc.(United States), robotics manufacturer, FANUC Corp. (Japan), and electronic components manufacturer, Murata Manufacturing Co. Ltd. (Japan). The top contributor to return was technology conglomerate, Alphabet, Inc. (United States). Other notable contributors included luxury goods manufacturer & retailer, Compagnie Financière Richemont SA (Switzerland), mortgage insurance provider, Essent Group (United States), specialty chemicals manufacturer, Ashland Global Holdings, Inc.(United States), and semiconductor manufacturer, Broadcom Corp. (United States).

Investment outlook

Although equity markets reached new highs during the month, we continue to find plenty of opportunities in undervalued stocks. We aim to identify companies poised to deliver improved earnings that can potentially rerate upwards as investors recognize the positive transformation these management teams have delivered. As central banks embark on a monetary tightening cycle to combat inflationary pressures, we expect rising discount rates to act as a headwind for the high-flying valuations of long-duration growth stocks. This should translate into an attractive environment for fundamental, value-oriented research. We have positioned our clients’ portfolios to take advantage of what is, in our view, mispricing in stocks heavily exposed to Covid (e.g., travel, leisure, aerospace, and aviation), balanced with companies in more defensive and cash flow generative industries such as pharmaceutical and utilities. In recent months, we have also increased the portfolio’s energy exposure. Many European integrated oil companies have rationed capital expenditures, diverting investments away from exploration and production towards renewables, leading to a dearth of supply amid the current surging demand. We, therefore, expect oil and gas prices to remain elevated and potentially rise further this winter. For many of our portfolio companies, we believe the earnings growth outlook is underpinned by pent up demand, strong balance sheets, and structurally lower costs than those prior to the pandemic. With many companies resuming dividend payments and share buybacks, we believe income should bolster the total return profile of portfolio holdings in the remainder of 2021 and into 2022.

The market commentary expresses the portfolio managers’ views as of the date of this report and should not be relied on as research or investment advice regarding any stock. These views and the portfolio holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. The securities identified and described above do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. Past performance does not guarantee future results. For a description of our performance attribution methodology, or to obtain a list showing every holding's contribution to the overall account's performance during the quarter, please contact our product manager, Kevin Moutes, at 310-231-6116 or [email protected].