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) 12.2%12.2%-1.2%8.1%5.1%8.4%10.0%
Strategy (net) 12.2%12.2%-1.7%7.5%4.6%7.8%9.4%
MSCI ACWI 7.2%7.2%-7.5%7.3%6.1%8.8%7.8%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 12.2%12.2%-1.2%8.1%5.1%8.4%10.0%
Strategy (net) 12.2%12.2%-1.7%7.5%4.6%7.8%9.4%
MSCI ACWI 7.2%7.2%-7.5%7.3%6.1%8.8%7.8%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 18.7%-12.7%-12.7%2.6%3.7%7.5%9.5%
Strategy (net) 18.5%-13.1%-13.1%2.1%3.2%7.0%8.8%
MSCI ACWI 9.9%-18.0%-18.0%4.5%5.8%8.5%7.5%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 18.7%-12.7%-12.7%2.6%3.7%7.5%9.5%
Strategy (net) 18.5%-13.1%-13.1%2.1%3.2%7.0%8.8%
MSCI ACWI 9.9%-18.0%-18.0%4.5%5.8%8.5%7.5%
Fund 20222021202020192018201720162015201420132012201120102009
Strategy (gross) -12.7%18.0%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) -13.1%17.4%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 -18.0%19.0%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
20222021202020192018201720162015201420132012201120102009
-12.7%18.0%4.9%23.0%-10.0%18.8%8.7%-5.4%7.1%31.8%18.3%-0.2%19.8%41.7%
-13.1%17.4%4.4%22.4%-10.4%18.3%8.2%-5.8%6.7%31.2%17.4%-1.1%18.8%40.5%
-18.0%19.0%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 December 31, 2022)

Benchmark: MSCI ACWI
Asset Allocation
Strategy
Stocks 97.4%
Cash 2.6%
Strategy Characteristics
Strategy Benchmark
No. of holdings 54 2885
Weighted avg. market cap (US $MM) $69,116 $246,816
FY2 price/earnings 12.5 14.2
Price/book value 1.9 2.5
Dividend yield (%) 2.1 2.3
TOP 10 HOLDINGS
Security Country Percent
Rolls-Royce Holdings Plc United Kingdom 3.9%
Prudential Plc United Kingdom 3.8%
UniCredit S.p.A. Italy 3.0%
Samsung Electronics Co., Ltd. South Korea 3.0%
Concentrix Corp. United States 2.9%
Enel SpA Italy 2.9%
SAP SE Germany 2.9%
Reckitt Benckiser Group United Kingdom 2.5%
The Walt Disney Co. United States 2.4%
Genpact Ltd. United States 2.3%

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 21.8% 20.0%
Industrials 17.4% 10.2%
Financials 13.8% 15.2%
Health Care 10.1% 13.4%
Materials 8.3% 5.0%
Consumer Discretionary 7.9% 10.4%
Consumer Staples 7.2% 7.7%
Communication Services 6.2% 6.8%
Utilities 3.9% 3.2%
Real Estate 0.8% 2.6%
Energy 0.0% 5.6%
TOP 10 COUNTRIES
Country Strategy Benchmark
United States 39.2% 60.4%
United Kingdom 17.8% 3.9%
France 10.2% 3.0%
Italy 6.0% 0.6%
Japan 4.3% 5.6%
South Korea 4.2% 1.3%
Switzerland 3.9% 2.6%
Germany 3.9% 2.1%
Netherlands 3.2% 1.1%
Ireland 1.6% 0.2%
Regional Allocation
  • Europe – other 47.9%
  • North America 40.7%
  • Pacific 8.5%
  • Emerging Asia 0.3%

Commentary (As of December 31, 2022)

Highlights

  • International equity markets rose sharply in the fourth quarter, on easing inflation concerns and optimism for China’s continued reopening. Boosted by a weaker dollar, December’s returns were positive, although comparatively modest, tempered by disappointing economic data and rising bond yields.
  • Recession in major world economies is emerging as a top concern for the coming year. Inflationary pressures should abate in the next few quarters, responding to the delayed impact of rising interest rates in most major economies globally. Re-opening of the Chinese economy should offset some of the global growth headwinds.
  • Lower valuations and relatively greater cyclicality in non-US equity markets should give non-US markets a chance to again outperform the US. As economies slow, we expect to reduce the portfolio’s lower-ranked defensive stocks to add more, in our view, competitively well-placed cyclical companies with the potential to improve free cash flow and return more capital to shareholders. We remain focused on identifying management teams able to increase free cash flow, boost dividends and reward shareholders with cash or share buybacks.

Portfolio attribution

The Portfolio outperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the software & services, insurance, and consumer services industry groups contributed to relative performance. Holdings in the media & entertainment and household & personal products industry groups, along with an underweight position in the food beverage & tobacco industry group, offset some of the outperformance compared to the Index. The top contributor to return was life insurer, Prudential Plc (United Kingdom). Other notable contributors included business services provider, Concentrix Corp.(United States), and banking & financial services company, UniCredit S.p.A. (Italy). The largest detractor was technology conglomerate, Alphabet, Inc. (United States). Additional notable detractors included media & entertainment conglomerate, The Walt Disney Co. (United States), and electronic equipment manufacturer, Samsung Electronics Co., Ltd. (South Korea).

Investment outlook

Weak earnings and a drain of global liquidity – the opposite of the post-GFC bull market - do not bode well for equity markets in the next several months. We anticipate margins coming under pressures as higher costs flow through income statements. Nominal revenue growth may remain elevated, but real earnings growth in certain sectors appears vulnerable in our view. Lower valuations and relatively greater cyclicality in non-US equity markets should give non-US markets a chance to again outperform the US. Attractively valued cyclical stocks may deliver relatively good returns in the second half of 2023 as global markets discount post-recession recovery. Further monetary tightening should favor stocks with reasonable valuations and abundant financial strength over those where earnings expectations and multiples still appear too high. Barring another oil supply shock, we believe energy is unlikely to lead the markets to the same extent as in 2022 as global oil & gas demand –besides China – wanes. The end of the era of free money combined with sharply rising short-term interest rates may expose weaknesses in the global financial system. We have reduced our bank weighting and added to economically defensive stocks, which should reduce portfolio risk at the margin. As economies slow, we expect to reduce the portfolio’s lower-ranked defensive stocks to add more, in our view, competitively well-placed cyclical companies with the potential to improve free cash flow and return more capital to shareholders. We remain focused on identifying management teams able to increase free cash flow, boost dividends and reward shareholders with cash or share buybacks.

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].