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) -4.6%-9.4%-8.0%4.7%4.4%6.3%7.1%
Strategy (net) -4.6%-9.5%-8.3%4.3%4.0%5.9%6.7%
MSCI EAFE -6.4%-11.8%-7.7%4.9%5.3%6.3%5.3%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -4.6%-9.4%-8.0%4.7%4.4%6.3%7.1%
Strategy (net) -4.6%-9.5%-8.3%4.3%4.0%5.9%6.7%
MSCI EAFE -6.4%-11.8%-7.7%4.9%5.3%6.3%5.3%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -5.0%-5.0%-2.3%7.2%5.9%6.5%7.4%
Strategy (net) -5.1%-5.1%-2.6%6.7%5.5%6.0%6.9%
MSCI EAFE -5.8%-5.8%1.6%8.3%7.2%6.8%5.7%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -5.0%-5.0%-2.3%7.2%5.9%6.5%7.4%
Strategy (net) -5.1%-5.1%-2.6%6.7%5.5%6.0%6.9%
MSCI EAFE -5.8%-5.8%1.6%8.3%7.2%6.8%5.7%
Fund 20212020201920182017201620152014201320122011201020092008200720062005200420032002
Strategy (gross) 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) 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 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
20212020201920182017201620152014201320122011201020092008200720062005200420032002
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%
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%
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 April 30, 2022)

Benchmark: MSCI EAFE
Asset Allocation
Strategy
Stocks 97.9%
Cash 2.1%
Strategy Characteristics
Strategy Benchmark
No. of holdings 59 825
Weighted avg. market cap (US $MM) $73,780 $68,540
FY2 price/earnings 10.6 12.6
Price/book value 1.6 1.8
Dividend yield (%) 3.0 3.0
TOP 10 HOLDINGS
Security Country Percent
Rolls-Royce Holdings Plc United Kingdom 3.4%
Novartis AG Switzerland 3.2%
UniCredit S.p.A. Italy 3.1%
TotalEnergies SE France 3.1%
Samsung Electronics Co., Ltd. South Korea 3.1%
Amadeus IT Group SA Spain 3.0%
Enel SpA Italy 3.0%
FANUC Corp. Japan 2.9%
SAP SE Germany 2.8%
AstraZeneca Plc United Kingdom 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
Financials 19.1% 17.5%
Industrials 17.9% 15.0%
Health Care 16.4% 13.5%
Information Technology 11.3% 8.2%
Consumer Staples 10.2% 10.7%
Energy 8.0% 4.3%
Consumer Discretionary 6.9% 11.2%
Utilities 5.9% 3.5%
Materials 2.2% 8.2%
Real Estate 0.0% 2.9%
Communication Services 0.0% 4.9%
TOP 10 COUNTRIES
Country Strategy Benchmark
United Kingdom 28.1% 15.7%
France 15.9% 11.4%
Switzerland 8.5% 10.5%
Germany 7.9% 8.1%
Spain 7.8% 2.4%
Japan 7.5% 21.8%
Italy 6.1% 2.3%
Netherlands 4.1% 4.2%
South Korea 4.1% 0.0%
Canada 2.3% 0.0%
Regional Allocation
  • Europe – other 81.7%
  • Pacific 13.2%
  • North America 2.3%
  • Emerging Asia 0.7%

Commentary (As of April 30, 2022)

Highlights

  • Global equities fell in April as the prospect of tighter global monetary policy, the war in Ukraine, and additional Covid-related lockdowns in China all weighed on sentiment. As market participants anticipate higher interest rates, growth stocks—those with the loftiest valuations—have seen greater losses relative to value peers in the year-to-date period.
  • Except for China, central banks globally are aiming to tighten monetary policy amid inflation that is substantially above-target without tipping their respective economies into recession. However, continuing supply chain bottlenecks, energy and labor shortages, and elevated consumer demand may make inflation difficult to contain in the short term.
  • We seek to add, in our view, high-quality, competitively well-positioned, cash-generative companies to our client portfolios, including those that we believe will benefit from a complete re-opening of the global economy, investment in energy independence in Europe, and the building of onshore manufacturing in many developed markets to mitigate supply chain vulnerabilities.

Portfolio attribution

The Portfolio outperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the pharmaceuticals & biotechnology, household & personal products, and banks industry groups, as well as an underweight position in the semiconductors & semi equipment and consumer durables & apparel industry groups, contributed to relative performance. Holdings in the capital goods, insurance, and transportation industry groups, along with an underweight position in the telecommunication services and real estate industry groups, offset some of the outperformance compared to the Index. The top contributor to return was health food & beverage producer, Danone (France). Other notable contributors included pharmaceutical giant, Sanofi (France), banking & financial services provider, Swedbank AB (Sweden), household & personal care products company, Reckitt Benckiser Group (United Kingdom), and consumer staples giant, Unilever (United Kingdom). The largest detractor was jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom). Additional notable detractors included robotics manufacturer, FANUC Corp. (Japan), life insurer, Prudential Plc (United Kingdom), banking & financial services company, UniCredit S.p.A. (Italy), and airport operator, Aena S.M.E. SA (Spain).

Investment outlook

More than a decade of intense global central bank quantitative easing (culminating in an explosion of monetary stimulus during Covid) pushed asset prices higher as too much money chased too few opportunities. That 10-year money geyser resulted in very low, and in some regions, negative, interest rates and equity valuation multiples that rose sharply, often outpacing earnings (or the prospect of earnings at some future date). We believe a new monetary policy regime has begun—one that will likely lead to the opposite result with earnings and multiples under pressure as investors once again focus on valuation. We are most interested in identifying companies with strong balance sheets and pricing power combined with effective cost-cutting measures that can protect their profit margins. We seek to add, in our view, high-quality, competitively well-positioned, cash-generative companies to our client portfolios, including those that we believe will benefit from a complete re-opening of the global economy, investment in energy independence in Europe, and the building of onshore manufacturing in many developed markets to mitigate supply chain vulnerabilities. We typically look for dividend income and share buybacks as an indication of management’s resolve to reward shareholders and maintain efficient capital structures. We want that dividend income compounding, providing an important component of total return for our clients.

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].