212 / 772
18
You may have noticed that there are relatively few
funds in the Morningstar
500
categorized as foreign
large value. That’s because the Morningstar Style
Box skews a bit toward growth, resulting in some
of the value-oriented foreign large-cap funds
being classified as foreign large-blend. Here I give
you a more complete picture of foreign large-cap
Morningstar Medalists that pursue value strategies.
They run the spectrum from deep value to relative
value. I’ll take them in order from the furthest to the
left of the style box over to the right. Or, to put it
another way, from deepest value to those that are
closer to the middle.
Causeway International Value
CIVVX
, which has a
Morningstar Analyst Rating of
Œ
, is the deepest-
value fund of the six because it buys battered shares
in hard-hit industries. Over time that’s worked quite
nicely, although lately it hasn’t performed so well.
Owning energy and materials has been a recipe for
trouble, but managers Harry Hartford and Sarah
Ketterer have had far more wins than losses. These
things tend to rotate in and out of favor, so this fund
may be a good rebound bet. The fund is also note-
worthy for its rule against owning emerging-markets
stocks, so investors are getting developed-markets
exposure only.
Tweedy, Browne Global Value
TBGVX
has energy
and materials stocks, too, but only in line with
the foreign large-value average. As I mentioned last
month, the fund hedges its currency exposure, and
that’s been a boon recently because of the strength-
ening dollar. But the reason for buying here is
Tweedy’s steadfast value approach. Tweedy uses
a Buffett-like strategy that emphasizes patiently
buying solid franchises at a discount. It has only
recently returned to energy for the first time in more
than a decade as it considers
Total
TOT
and
Shell
’s
RDS
.A discounts too attractive to pass up.
The fund now has stellar returns over the trailing
three-, five-,
10
-, and
15
-year periods, but it is still
prone to stretches when it falls out of favor.
´
-rated
Vanguard International Value
VTRIX
has three flavors of value on offer. Lazard Asset
Management, which runs
40%
of assets, is a relative
value manager, and Edinburgh Partners, which
runs
35%
, uses a more traditional value approach.
Deep-value shop
ARGA
Investment Management
runs
25%
of the fund. That approach means the fund
tends to avoid the top or bottom decile on a yearly
basis, but over the long haul returns are solid. The
mix of three advisors means the portfolio isn’t
drastically different from the norm, but the fund has
bigger weightings in Japan and emerging markets
than its peers. With fees of just
0
.
44%
, management
has a fairly low bar to beat its benchmark.
Dodge & Cox International Stock
DODFX
shows
the value of sticking with value investing through
thick and thin. After a great run, financials killed the
fund in
2008
, but the managers stuck to their guns
and have produced strong results since then. The fund
closed to new investors in January—another sign
of Dodge’s shareholder-friendly outlook.
Oakmark International
OAKIX
, also closed to new
investors, has outstanding trailing returns as David
Herro and Rob Taylor have been adept value investors.
They look for companies trading at steep discounts
to their intrinsic values. While growth managers
chase the next big thing, these managers just want
to buy a good company on the cheap. There’s a
reason, after all, that value has produced such strong
returns.
BNP Paribas
BNP
and
Daimler
DAI
are
not nearly as exciting as
Alibaba
BABA
and
Tesla
TSLA
, but their returns are.
´
-rated
MainStay ICAP International
ICEUX
has stayed true to its strategy of buying value with
a catalyst over the years. That will bear watching as
comanager Tom Wenzel stepped down in
2014
for health reasons, but lead manager Jerry Senser
remains in place. He’s had some nice winners
among financials.
K
The Foreign-Value Rainbow
Tracking Morningstar Analyst Ratings
|
Russel Kinnel
What Are Morningstar
Analyst Ratings?
Our ratings are chosen for long-
term success. Analysts assess
a fund’s competitive advantages
by analyzing people, process,
parent, performance, and price.
They do rigorous analysis and
then submit their ratings to a
committee that vets their work
for thoroughness and consistency.