Global (ex-US) Value is an index unconstrained, diversified, value-based investment strategy designed to deliver higher long-run returns. We believe that investors who are prepared to take a long-term view and invest away from the crowd should be rewarded with gross returns of 3 to 4% above MSCI EAFE over the full economic cycle.
- Value outperforms in the long run: Our analysis suggests that value investing ‘works’ in 36 out of 40 countries. Academic evidence dating back to the 1920s supports the idea that value is a powerful long-term investment strategy. Our approach to investing is designed to invest alongside this favorable long-run tailwind from value.
- High return without concentrated stock risk: Seeking higher returns can be associated with greater risk, as this is often achieved through a very concentrated stock portfolio. We reduce stock risk by building a highly diversified portfolio but with no less conviction.
- Stock weights determined by fundamentals, not market cap: Our approach is to weight stocks based upon their fundamentals and liquidity. This is more balanced and reduces the problem of the ‘mega-cap’ drag which is particularly acute for other value investors.
- Bottom-up, index unconstrained investing is more efficient: We maximize our investment opportunities by systematically analyzing over 15,000 global stocks every day. The more attractively-priced stocks we find in a particular region or sector, the greater the subsequent portfolio allocation. This unconstrained bottom-up approach to maximizes the potential return opportunity and avoids dead-money being allocated to expensive stocks to satisfy index constraints.