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.

Benchmark
MSCI EAFE
Inception
March 31, 2005
Download Profile Sheet Download Flash Report Download Quarterly Review
Contact Us

Strategy overview

The portfolio managers discuss our International Value Select 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) -4.4%-8.8%-7.2%4.9%4.7%6.7%6.0%
Strategy (net) -4.4%-8.9%-7.5%4.5%4.3%6.3%5.5%
MSCI EAFE -6.4%-11.8%-7.7%4.9%5.3%6.3%5.1%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -4.4%-8.8%-7.2%4.9%4.7%6.7%6.0%
Strategy (net) -4.4%-8.9%-7.5%4.5%4.3%6.3%5.5%
MSCI EAFE -6.4%-11.8%-7.7%4.9%5.3%6.3%5.1%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -4.6%-4.6%-1.6%7.3%6.2%6.8%6.3%
Strategy (net) -4.6%-4.6%-2.0%6.9%5.8%6.4%5.8%
MSCI EAFE -5.8%-5.8%1.6%8.3%7.2%6.8%5.5%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -4.6%-4.6%-1.6%7.3%6.2%6.8%6.3%
Strategy (net) -4.6%-4.6%-2.0%6.9%5.8%6.4%5.8%
MSCI EAFE -5.8%-5.8%1.6%8.3%7.2%6.8%5.5%
Fund 2021202020192018201720162015201420132012201120102009
Strategy (gross) 10.4%6.9%21.2%-17.2%29.5%1.5%-1.3%-4.3%27.2%24.7%-9.6%13.2%35.4%
Strategy (net) 10.0%6.5%20.8%-17.5%29.1%1.1%-1.7%-4.7%26.8%24.3%-9.9%12.7%34.8%
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%
Strategy (gross)
Strategy (net)
MSCI EAFE
2021202020192018201720162015201420132012201120102009
10.4%6.9%21.2%-17.2%29.5%1.5%-1.3%-4.3%27.2%24.7%-9.6%13.2%35.4%
10.0%6.5%20.8%-17.5%29.1%1.1%-1.7%-4.7%26.8%24.3%-9.9%12.7%34.8%
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%

Portfolio (as of April 30, 2022)

Benchmark: MSCI EAFE
Asset Allocation
Strategy
Stocks 98.2%
Cash 1.8%
Strategy Characteristics
Strategy Benchmark
No. of holdings 58 825
Weighted avg. market cap (US $MM) $73,977 $68,540
FY2 price/earnings 10.5 12.6
Price/book value 1.6 1.8
Dividend yield (%) 3.1 3.0
TOP 10 HOLDINGS
Security Country Percent
Rolls-Royce Holdings Plc United Kingdom 3.5%
TotalEnergies SE France 3.3%
UniCredit S.p.A. Italy 3.2%
FANUC Corp. Japan 3.1%
Samsung Electronics Co., Ltd. South Korea 3.1%
Amadeus IT Group SA Spain 3.0%
Novartis AG Switzerland 3.0%
Enel SpA Italy 3.0%
SAP SE Germany 2.9%
Shell 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 19.5% 17.5%
Industrials 18.2% 15.0%
Health Care 16.2% 13.5%
Information Technology 11.4% 8.2%
Consumer Staples 10.1% 10.7%
Energy 8.4% 4.3%
Utilities 6.0% 3.5%
Consumer Discretionary 6.0% 11.2%
Materials 2.3% 8.2%
Real Estate 0.0% 2.9%
Communication Services 0.0% 4.9%
TOP 10 COUNTRIES
Country Strategy Benchmark
United Kingdom 27.2% 15.7%
France 16.1% 11.4%
Switzerland 8.6% 10.5%
Germany 8.1% 8.1%
Spain 7.9% 2.4%
Japan 7.7% 21.8%
Italy 6.1% 2.3%
Netherlands 4.2% 4.2%
South Korea 4.1% 0.0%
Canada 2.4% 0.0%
Regional Allocation
  • Europe – other 81.5%
  • Pacific 13.5%
  • North America 2.4%
  • Emerging Asia 0.8%

Commentary (As of March 31, 2022)

Highlights

  • Despite heightened volatility following Russia’s invasion of Ukraine, developed market equities recovered in March to finish the month in positive territory.
  • 2022 began with a generally favorable backdrop for global economic activity—which was upended in late February by Russia’s invasion of Ukraine. Sanctions from the US and European countries on Russia, ongoing supply chain bottlenecks related to the pandemic, and anticipated disruptions to energy and commodity markets have exacerbated inflationary pressures.
  • Companies in the industrials, consumer discretionary, and banks industries fared poorly in the wake of the invasion. We believe this mispricing creates buying opportunities in high-quality companies.

Portfolio attribution

The Portfolio underperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the banks, materials, capital goods, utilities, and household & personal products industry groups detracted from relative performance. Holdings in the insurance and food & staples retailing industry groups, as well as an overweight position in the pharmaceuticals & biotechnology industry group and an underweight position in the retailing and consumer durables & apparel industry groups, offset some of the underperformance compared to the Index. The largest detractor was banking & financial services company, UniCredit S.p.A. (Italy). Additional notable detractors included diversified chemicals manufacturer, BASF SE (Germany), banking & financial services company, Barclays Plc (United Kingdom), electric, gas & renewables power generation & distribution company, Enel SpA (Italy), and automobile manufacturer, Volkswagen AG (Germany). The top contributor to return was pharmaceuticals & chemicals company, Bayer AG (Germany). Other notable contributors included pharmaceutical company, AstraZeneca Plc (United Kingdom), insurer, AXA SA (France), financial services company, Zurich Insurance Group (Switzerland), and pharmaceuticals & biotechnology company, Roche Holding AG (Switzerland).

Investment outlook

After a very strong start to the year, equity markets’ reactions to Russia’s invasion of Ukraine weighed heavily on portfolio performance in the second half of the quarter. The Russian attack triggered sell-offs in what we see as high-quality portfolio companies, presenting us with a chance to lower average costs. The subsequent “risk-off” sentiment led to the selling of cyclical stocks, notably those in the Covid recovery category, such as travel, aerospace, leisure, and hospitality. We believe markets are pricing in a second-order effect that assumes that the additional inflation caused by the invasion will be met by severe monetary tightening and negative real gross domestic product growth in most non-commodity exporting countries. In our view, even if Europe tumbles into recession, many of its financial and industrial sector stocks (the most cyclical) increasingly discount such an outcome. Traditionally, buying cyclical stocks into a recession has often proven fruitful given their sizable outperformance as markets look forward and anticipate economic recovery. After such an enormous flood of global monetary expansion, capped by the pandemic period, many market participants appear to have forgotten about cycles. We remember them vividly and have started positioning client portfolios to potentially take advantage of the future recovery.

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].