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) 5.1%16.7%67.4%10.6%11.3%9.2%11.0%
Strategy (net) 5.0%16.5%66.6%10.0%10.8%8.6%10.3%
MSCI ACWI 6.1%11.1%42.5%14.4%14.8%10.2%8.8%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 5.1%16.7%67.4%10.6%11.3%9.2%11.0%
Strategy (net) 5.0%16.5%66.6%10.0%10.8%8.6%10.3%
MSCI ACWI 6.1%11.1%42.5%14.4%14.8%10.2%8.8%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 11.1%11.1%81.0%9.8%11.1%9.1%10.8%
Strategy (net) 10.9%10.9%80.1%9.3%10.6%8.5%10.1%
MSCI ACWI 4.7%4.7%55.3%12.7%13.8%9.7%8.5%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 11.1%11.1%81.0%9.8%11.1%9.1%10.8%
Strategy (net) 10.9%10.9%80.1%9.3%10.6%8.5%10.1%
MSCI ACWI 4.7%4.7%55.3%12.7%13.8%9.7%8.5%
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 May 31, 2021)

Benchmark: MSCI ACWI
Asset Allocation
Strategy
Stocks 97.9%
Cash 2.1%
Strategy Characteristics
Strategy Benchmark
No. of holdings 54 2986
Weighted avg. market cap (US $MM) $122,982 $269,387
FY2 price/earnings 15.2 17.5
Price/book value 2.4 3.0
Dividend yield (%) 1.7 1.7
TOP 10 HOLDINGS
Security Country Percent
Alphabet Inc. United States 4.0%
Samsung Electronics Co., Ltd. South Korea 3.5%
Ashland Global Holdings, Inc. United States 3.2%
Rolls-Royce Holdings Plc United Kingdom 3.2%
Novartis AG Switzerland 3.0%
Sabre Corp. United States 2.9%
Sanofi France 2.8%
Essent Group United States 2.7%
Booking Holdings, Inc. United States 2.7%
UniCredit S.p.A. Italy 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 26.1% 20.9%
Industrials 14.5% 10.1%
Health Care 13.5% 11.4%
Financials 11.9% 14.8%
Communication Services 8.5% 9.3%
Consumer Discretionary 6.3% 12.6%
Materials 6.2% 5.2%
Utilities 5.5% 2.8%
Energy 2.6% 3.3%
Consumer Staples 1.6% 7.0%
Real Estate 1.3% 2.6%
TOP 10 COUNTRIES
Country Strategy Benchmark
United States 53.2% 57.8%
Switzerland 9.0% 2.5%
France 7.8% 3.0%
Germany 6.5% 2.5%
South Korea 6.2% 1.7%
Japan 5.3% 6.0%
Italy 3.7% 0.7%
United Kingdom 3.2% 3.8%
Canada 1.9% 2.9%
Spain 1.1% 0.7%
Regional Allocation
  • North America 55.1%
  • Europe – other 30.8%
  • Emerging Asia 6.2%
  • Pacific 5.3%
  • Emerging Latin America 0.1%

Commentary (As of April 30, 2021)

Highlights

  • The worldwide drive to stimulate economic activity and vaccinate populations added demand to equity buying in April with most major developed market indices closing at 10-year-highs.
  • With consumers beginning to unleash pent up demand, the effects of fiscal and monetary stimulus continuing to permeate the global economy, and with supply constraints intensifying, inflationary pressures are starting to emerge.
  • In asset markets awash in monetary liquidity, the price discounting mechanism has accelerated, and stock prices have reflected future good news quickly, sometimes long before earnings uplift occurs. At present, we are more interested in defensive companies that have lagged the cyclical rally.

Portfolio attribution

The Portfolio underperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the pharmaceuticals & biotechnology, materials, semiconductors & semi equipment, technology hardware & equipment, and software & services industry groups detracted from relative performance. Holdings in the media & entertainment and insurance industry groups, as well as an underweight position in the automobiles & components, household & personal products, and food & staples retailing industry groups, offset some of the underperformance compared to the Index. The largest detractor was Takeda Pharmaceutical Co., Ltd. (Japan). Additional notable detractors included specialty chemicals manufacturer, Ashland Global Holdings, Inc. (United States), integrated oil & gas company, Total (France), airline, AIR Canada (Canada), and oil exploration & production company, ConocoPhillips (United States). The top contributor to return was technology conglomerate, Alphabet Inc. (United States). Other notable contributors included mortgage insurance provider, Essent Group (United States), business process outsourcing services provider, Genpact Ltd. (United States), pharmaceutical giant, Sanofi (France), and online travel agency, Booking Holdings, Inc. (United States).

Investment outlook

Since November 2020, global equity markets have generally favored companies poised to benefit from economic reopening and recovery. As we have noted in prior reviews, cyclical sectors usually outperform market indices in periods following recessions and market lows, as earnings momentum shifts in favor of economically sensitive businesses. This cycle has fit that pattern, with extremely rapid and large increases in the share prices of cyclical companies. Within the MSCI ACWI Index, the industrials, materials, energy, consumer discretionary, and financials sectors on average delivered 103% absolute returns from the Covid-19 crisis market trough in March 2020 through April 2021, outperforming the other sectors in the Index by 35%. Given the rapid upward re-rating, we have responded by reducing the portfolio’s cyclical exposure and reinvesting sale proceeds into, in our view, high quality, less economically sensitive businesses with less earnings volatility. For example, we exited what had once been one of the largest-weighted holdings in client fundamental portfolios, an auto manufacturer that finally was recognized for its electric vehicle transition. After a period of strong performance, based on our analysis, its risk-adjusted expected return ranked less competitively relative to other stocks. In asset markets awash in monetary liquidity, the price discounting mechanism has accelerated, and stock prices have reflected future good news quickly, sometimes long before earnings uplift occurs. At present, we are more interested in defensive companies that have lagged the cyclical rally, including innovative pharmaceutical companies trading near all-time-low relative valuations, and forward-thinking utilities repositioning their companies for the renewable energy transition. We have also been adding to defensive information technology companies that generate recurring revenue from critical infrastructure software. The portfolio remains cyclically positioned, but we believe its lowered risk profile, diversified across risk factors, should be resilient in a broader range of market outcomes. Generally, our portfolio companies are engaged in operational restructuring. We believe we have identified companies that used the Covid-19 crisis to cut costs and boost efficiency and should emerge from the pandemic with improved earnings power and a stronger competitive positioning. We expect these companies to re-rate upward as the market recognizes their progress and look forward to increasing levels of capital returned to shareholders with dividends and 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].