Seeking value primarily in the non-US developed markets

The international value portfolio is constructed from an equity universe composed of companies with market capitalizations typically greater than $1 billion located throughout the non-US 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 EAFE
Inception
June 11, 2001
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Strategy overview

The portfolio managers discuss our International 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) 10.0%14.9%26.2%11.6%12.5%7.1%8.3%
Strategy (net) 9.9%14.6%25.7%11.2%12.1%6.7%7.8%
MSCI EAFE 7.3%13.5%25.4%6.0%8.7%6.2%6.0%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 10.0%14.9%26.2%11.6%12.5%7.1%8.3%
Strategy (net) 9.9%14.6%25.7%11.2%12.1%6.7%7.8%
MSCI EAFE 7.3%13.5%25.4%6.0%8.7%6.2%6.0%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 10.0%14.9%26.2%11.6%12.5%7.1%8.3%
Strategy (net) 9.9%14.6%25.7%11.2%12.1%6.7%7.8%
MSCI EAFE 7.3%13.5%25.4%6.0%8.7%6.2%6.0%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 10.0%14.9%26.2%11.6%12.5%7.1%8.3%
Strategy (net) 9.9%14.6%25.7%11.2%12.1%6.7%7.8%
MSCI EAFE 7.3%13.5%25.4%6.0%8.7%6.2%6.0%
Fund 2023202220212020201920182017201620152014201320122011201020092008200720062005200420032002
Strategy (gross) 29.0%-7.2%10.5%6.1%22.5%-18.0%28.6%1.1%-1.9%-4.6%27.6%24.6%-10.2%13.9%37.7%-43.0%9.8%27.5%9.0%29.5%48.4%-8.9%
Strategy (net) 28.5%-7.6%10.1%5.6%22.0%-18.4%28.0%0.7%-2.3%-5.0%27.1%24.1%-10.5%13.4%37.1%-43.2%9.4%27.0%8.5%29.0%47.8%-9.2%
MSCI EAFE 18.9%-14.0%11.8%8.3%22.7%-13.4%25.6%1.5%-0.4%-4.5%23.3%17.9%-11.7%8.2%32.5%-43.1%11.6%26.9%14.0%20.7%39.2%-15.7%
Strategy (gross)
Strategy (net)
MSCI EAFE
2023202220212020201920182017201620152014201320122011201020092008200720062005200420032002
29.0%-7.2%10.5%6.1%22.5%-18.0%28.6%1.1%-1.9%-4.6%27.6%24.6%-10.2%13.9%37.7%-43.0%9.8%27.5%9.0%29.5%48.4%-8.9%
28.5%-7.6%10.1%5.6%22.0%-18.4%28.0%0.7%-2.3%-5.0%27.1%24.1%-10.5%13.4%37.1%-43.2%9.4%27.0%8.5%29.0%47.8%-9.2%
18.9%-14.0%11.8%8.3%22.7%-13.4%25.6%1.5%-0.4%-4.5%23.3%17.9%-11.7%8.2%32.5%-43.1%11.6%26.9%14.0%20.7%39.2%-15.7%

Portfolio (as of September 30, 2024)

Benchmark: MSCI EAFE
Asset Allocation
Strategy
Stocks 97.6%
Cash 2.4%
Strategy Characteristics
Strategy Benchmark
No. of holdings 66 732
Weighted avg. market cap (US $MM) $69,132 $82,654
FY2 price/earnings 11.6 13.7
Price/book value 1.5 1.9
Dividend yield (%) 2.9 3.0
TOP 10 HOLDINGS
Security Country Percent
Rolls-Royce Holdings Plc United Kingdom 4.5%
Alstom SA France 4.3%
Barclays PLC United Kingdom 3.3%
Samsung Electronics Co., Ltd. South Korea 3.2%
Kering SA France 3.2%
Reckitt Benckiser Group Plc United Kingdom 2.9%
Akzo Nobel Netherlands 2.7%
Roche Holding AG Switzerland 2.5%
Renesas Electronics Corp. Japan 2.5%
Prudential Plc United Kingdom 2.4%

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 17.1% 17.3%
Financials 16.8% 20.6%
Information Technology 13.9% 8.7%
Consumer Staples 13.0% 8.7%
Health Care 11.3% 13.3%
Consumer Discretionary 7.2% 11.0%
Materials 7.0% 6.8%
Utilities 3.6% 3.4%
Energy 3.3% 3.6%
Communication Services 3.2% 4.3%
Real Estate 1.1% 2.2%
TOP 10 COUNTRIES
Country Strategy Benchmark
United Kingdom 31.6% 14.7%
France 18.5% 11.4%
Japan 11.3% 22.3%
Germany 8.9% 9.0%
Netherlands 6.5% 4.8%
Italy 4.3% 2.7%
South Korea 3.7% 0.0%
Switzerland 3.3% 9.9%
Belgium 1.8% 1.0%
China 1.7% 0.0%
Regional Allocation
  • Europe – other 76.3%
  • Pacific 12.8%
  • North America 2.2%
  • Emerging Asia 5.4%
  • Developed Middle East 0.5%
  • Emerging Latin America 0.4%

Commentary (As of August 31, 2024)

Highlights

  • Global equities rose in August, with both developed and emerging markets posting gains for the month.
  • Monetary tightening in many of the world's economies is slowing economic growth, albeit with long and variable lags. While central banks have largely tamed inflation, high absolute prices for goods and services are causing voter dissatisfaction in many countries.
  • Narrow, momentum-led markets and political risks are creating investment opportunities. As markets concentrate enthusiasm for generative AI in a cohort of chipmakers, we believe client fundamental portfolios have exposure to lesser-known beneficiaries of this technology cycle, across building, delivery, and deployment phases.

Portfolio Attribution

The Portfolio outperformed the Index during the month, due primarily to currency allocation (a byproduct of our bottom-up stock selection process). Portfolio holdings in the capital goods, semiconductors & semi equipment, and consumer staples distribution & retail industry groups contributed to relative performance. Holdings in the technology hardware & equipment, consumer durables & apparel, and financial services industry groups offset some of the outperformance compared to the Index. The top contributor to return was jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom). Other notable contributors included convenience store retailer, Seven & i Holdings Co., Ltd. (Japan), and pharmaceutical & consumer healthcare company, GSK Plc (United Kingdom). The largest detractor was electronic equipment manufacturer, Samsung Electronics Co., Ltd. (South Korea). Additional notable detractors included multinational luxury conglomerate, Kering SA (France), and Asian life insurer, Prudential Plc (United Kingdom).

Quarterly Investment Outlook

Monetary tightening in many of the world's economies is slowing economic growth, albeit with long and variable lags. While central banks have largely tamed inflation, high absolute prices for goods and services are causing voter dissatisfaction in many countries. In the US, the much-anticipated reduction in interest rates may materialize this September. The European Central Bank has left open the possibility for additional rate cuts later this year. We expect property market restructuring and amplified trade sanctions to encumber Chinese economic recovery – and dampen global growth through year end.

Narrow, momentum-led markets and political risks are creating investment opportunities. As markets concentrate enthusiasm for generative AI in a cohort of chipmakers, we believe client fundamental portfolios have exposure to lesser-known beneficiaries of this technology cycle, across building, delivery, and deployment phases. Fading bullishness for the Japanese market has created potentially promising valuations. We also remain focused on long-term rewards from operational restructuring, aiming to invest in companies poised for earnings growth and shareholder returns ahead of market recognition.

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].