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.

Strategy overview

The portfolio managers discuss our Global Value strategy.

Portfolio managers

Chief Executive Officer
Fundamental Portfolio Manager
President
Head of Fundamental Research
Fundamental Portfolio Manager
Fundamental Portfolio Manager
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) -3.9%-3.9%9.3%7.4%5.8%10.3%10.4%
Strategy (net) -3.9%-3.9%8.8%6.9%5.3%9.6%9.7%
MSCI ACWI -1.1%-1.1%16.7%11.6%9.1%9.7%7.9%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -3.9%-3.9%9.3%7.4%5.8%10.3%10.4%
Strategy (net) -3.9%-3.9%8.8%6.9%5.3%9.6%9.7%
MSCI ACWI -1.1%-1.1%16.7%11.6%9.1%9.7%7.9%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 11.1%23.0%23.0%9.6%6.2%10.5%10.6%
Strategy (net) 11.0%22.4%22.4%9.1%5.7%9.8%10.0%
MSCI ACWI 9.1%27.3%27.3%13.0%9.0%9.4%8.0%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 11.1%23.0%23.0%9.6%6.2%10.5%10.6%
Strategy (net) 11.0%22.4%22.4%9.1%5.7%9.8%10.0%
MSCI ACWI 9.1%27.3%27.3%13.0%9.0%9.4%8.0%
Fund 20192018201720162015201420132012201120102009
Strategy (gross) 23.0%-10.0%18.8%8.7%-5.4%7.1%31.8%18.3%-0.2%19.8%41.7%
Strategy (net) 22.4%-10.4%18.3%8.2%-5.8%6.7%31.2%17.4%-1.1%18.8%40.5%
MSCI ACWI 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
20192018201720162015201420132012201120102009
23.0%-10.0%18.8%8.7%-5.4%7.1%31.8%18.3%-0.2%19.8%41.7%
22.4%-10.4%18.3%8.2%-5.8%6.7%31.2%17.4%-1.1%18.8%40.5%
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 January 31, 2020)

Benchmark: MSCI ACWI
Asset Allocation
Strategy
Stocks 98.2%
Cash 1.8%
Strategy Characteristics
Strategy Benchmark
No. of holdings 48 3045
Weighted avg. market cap (US $MM) $89,837 $176,691
FY2 price/earnings 11.5 15.5
Price/book value 1.5 2.4
Dividend yield (%) 3.2 2.4
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AG Germany 4.0%
Takeda Pharmaceutical Co., Ltd. Japan 3.6%
UniCredit S.p.A. Italy 3.3%
China Mobile Ltd. China 3.3%
BASF SE Germany 3.2%
SYNNEX Corp. United States 3.2%
British American Tobacco plc United Kingdom 3.2%
ABB Ltd. Switzerland 3.1%
Sabre Corp. United States 3.1%
Samsung Electronics Co., Ltd. South Korea 2.9%

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
Industrials 18.3% 10.3%
Information Technology 17.5% 17.8%
Communication Services 12.3% 8.8%
Financials 11.5% 16.4%
Health Care 11.2% 11.7%
Energy 8.8% 4.8%
Materials 8.2% 4.5%
Consumer Discretionary 4.6% 10.8%
Consumer Staples 3.2% 8.1%
Utilities 2.7% 3.5%
Real Estate 0.0% 3.2%
TOP 10 COUNTRIES
Country Strategy Benchmark
United States 36.7% 56.3%
United Kingdom 15.4% 4.7%
Germany 11.6% 2.5%
Japan 8.2% 7.1%
China 5.7% 4.0%
Switzerland 5.5% 2.8%
South Korea 5.0% 1.4%
France 3.4% 3.3%
Italy 3.3% 0.7%
Netherlands 2.4% 1.1%
Regional Allocation
  • Europe – other 41.6%
  • North America 37.7%
  • Emerging Asia 10.7%
  • Pacific 8.2%

Commentary (As of January 31, 2020)

Highlights

  • After delivering impressive returns in calendar 2019, equity markets faltered in January in local currency terms, as concerns over the coronavirus outbreak may have weighed on investor optimism.
  • In China, key infrastructure and travel were shut down in an attempt to slow the spread of the coronavirus, which will likely be a near-term drag on Chinese (and global) economic growth. Chinese authorities will likely enact additional targeted stimulus in response to the outbreak.
  • Our fundamental research seeks to identify well-managed companies with strong balance sheets, with company leaders committed to improving earnings. As we wait for these companies to emerge from operational setbacks and reignite growth, they typically generate sufficient cash flow to reward shareholders via dividends and share buybacks.

Portfolio attribution

The Portfolio underperformed the Index during the month, due primarily to stock selection. Holdings in the energy, media & entertainment, software & services, materials, and automobiles & components industry groups detracted from performance compared to the Index. Portfolio holdings in the retailing, capital goods, food beverage & tobacco, and technology hardware & equipment industry groups, as well as an underweight position in the consumer durables & apparel industry group, contributed to relative performance. The largest detractor was oil exploration & production company, Ovintiv (Canada). Additional notable detractors included automobile manufacturer, Volkswagen AG (Germany), ViacomCBS, Inc. (United States), diversified chemicals manufacturer, BASF SE (Germany), and banking & financial services company, UniCredit S.p.A. (Italy). The top contributor to return was specialty retail jeweler, Signet Group (United States). Other notable contributors included power & healthcare conglomerate, General Electric Co.(United States), design-to-distribution business process services technology company, SYNNEX Corp. (United States), software giant, Microsoft Corp. (United States), and British American Tobacco plc (United Kingdom).

Investment outlook

In the prevailing global interest rate environment with the opportunity cost of owning long duration growth stocks low to negative, investors have continued to bid up expensive stocks to even higher valuations. Should these seemingly speculative, currently high valuation stocks fail to live up to their elevated expectations, we anticipate that the stable cash flows of economically sensitive, yet financially robust, companies would attract investor attention. Our fundamental research seeks to identify well-managed companies with strong balance sheets, with company leaders committed to improving earnings. As we wait for these companies to emerge from operational setbacks and reignite growth, they typically generate sufficient cash flow to reward shareholders via dividends and share buybacks. In the current low interest rate environment, we find the income from these undervalued stocks especially compelling as a major component of total return.

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].