Seeking value primarily in the non-US developed markets

The International Value Select portfolio is constructed from an equity universe composed of companies with market capitalizations typically greater than $5 billion located in non-US developed and emerging market countries. The strategy uses our international value equity strategy with two distinctions: the select portfolio has greater liquidity (by way of investing in larger capitalization companies) and fewer holdings. We believe that concentrating the holdings can compensate for the loss of small/mid cap exposure. The investment process comprises three stages: quantitative screening and initial analysis, fundamental research, and portfolio construction.

March 31, 2005

Strategy overview

The portfolio managers discuss our International Value Select strategy.

Portfolio managers

Chief Executive Officer
Fundamental Portfolio Manager
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


QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)-2.6%8.4%-8.2%6.3%2.0%7.4%5.8%
Strategy (net)-2.6%8.2%-8.5%5.9%1.6%7.0%5.3%
MSCI EAFE-1.3%13.1%-2.1%7.4%2.9%6.3%5.0%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)-2.6%8.4%-8.2%6.3%2.0%7.4%5.8%
Strategy (net)-2.6%8.2%-8.5%5.9%1.6%7.0%5.3%
MSCI EAFE-1.3%13.1%-2.1%7.4%2.9%6.3%5.0%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)0.6%11.3%-3.1%8.7%2.1%8.9%6.0%
Strategy (net)0.5%11.1%-3.4%8.3%1.8%8.5%5.6%
MSCI EAFE4.0%14.5%1.6%9.6%2.7%7.4%5.1%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)0.6%11.3%-3.1%8.7%2.1%8.9%6.0%
Strategy (net)0.5%11.1%-3.4%8.3%1.8%8.5%5.6%
MSCI EAFE4.0%14.5%1.6%9.6%2.7%7.4%5.1%
Strategy (gross)-17.5%29.7%1.6%-1.3%-4.3%27.2%24.7%-9.5%13.5%34.6%
Strategy (net)-17.8%29.2%1.3%-1.7%-4.7%26.8%24.3%-9.9%13.0%34.0%
MSCI EAFE-14.3%22.1%5.7%-5.2%-4.9%23.6%18.4%-11.6%3.8%35.1%
Strategy (gross)
Strategy (net)

Portfolio (as of July 31, 2019)

Benchmark: MSCI EAFE
Asset Allocation
Strategy Characteristics
No. of holdings 54 923
Weighted avg. market cap (US $MM)$57,332$52,965
FY2 price/earnings10.513.1
Price/book value1.21.6
Dividend yield (%)4.03.4
Security Country Percent
Volkswagen AGGermany4.5%
Takeda Pharmaceutical Co., Ltd.Japan3.7%
BASF SEGermany3.6%
UniCredit S.p.A.Italy3.3%
Prudential PlcUnited Kingdom3.1%
Linde PlcGermany3.1%
British American Tobacco plcUnited Kingdom3.1%
ABB Ltd.Switzerland3.1%
AstraZeneca PlcUnited Kingdom3.0%
KDDI Corp.Japan3.0%

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 Strategy Benchmark
Communication Services11.8%5.5%
Health Care11.1%11.3%
Consumer Discretionary7.1%11.2%
Information Technology5.9%6.8%
Consumer Staples4.8%11.9%
Real Estate0.0%3.6%
Country Strategy Benchmark
United Kingdom30.1%16.7%
South Korea4.9%0.0%
Regional Allocation
  • Europe – other 68.1%
  • Pacific 19.3%
  • Emerging Asia 5.3%
  • North America 5.3%
  • Emerging Europe, Middle East, Africa 0.3%

Commentary (As of June 30, 2019)


  • Bolstered by central bank dovishness, developed equity markets rallied in June and furthered year-to-date gains.

Portfolio attribution

The Portfolio performed in-line with the Index during the month. Portfolio holdings in the capital goods, energy, transportation, and consumer services industry groups, along with an overweight position in the telecommunication services industry group, detracted from relative performance. Holdings in the materials, technology hardware & equipment, and software & services industry groups, as well as an underweight position in the real estate and household & personal products industry groups, contributed to relative performance. The largest detractor was retail bank, Caixabank SA (Spain). Additional notable detractors included cruise ship operator, Carnival Plc (United Kingdom), oil & natural gas producer, Encana (Canada), major passenger railway operator, East Japan Railway Co. (Japan), and jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom). The top contributor to return was industrial gas company, Linde Plc (Germany). Other notable contributors included automobile manufacturer, Volkswagen AG (Germany), diversified chemicals manufacturer, BASF SE (Germany), pharmaceutical company, AstraZeneca Plc (United Kingdom), and electronic equipment manufacturer, Samsung Electronics Co., Ltd. (South Korea).

Investment outlook

The 2019 G20 summit struck a tone of geopolitical fragmentation as major relationships worldwide shift and nationalistic sentiment increases. Though we do not believe globalization will reverse, global equity markets appear to disagree with us. Economically defensive stocks have generally reached, in our view, extreme valuation highs, and economically sensitive cyclical stocks have lagged. The decline in bond yields in major economies globally has also dampened investor enthusiasm for cyclicality, and favored long duration growth stocks. When the price of money (aka borrowing) falls to such low levels, investors typically get more desperate to buy growth at increasingly higher valuations. Can central banks, especially the Fed, prolong the post-2008 economic expansion by ultra-accommodative monetary policy? And if they cannot, how deep a recession would the US and other economies endure? Rather than wait for an economic cycle turn that may or may not occur, we seek to build an “all weather” portfolio not entirely dependent on a return of value's dominance over growth. Our research focuses on companies with managements implementing operational improvements that translate to greater efficiency and expansion potential. We believe this operational “self-help” should deliver an improvement in earnings and free cash flow growth. We seek companies returning excess capital to shareholders so that we can reinvest those proceeds. Income (via dividends and share buybacks) has historically been an important component of total return in any interest rate environment.

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