Active Equity Approach
In our active international portfolio, we believe foreign stocks with positive earnings characteristics purchased at reasonable valuations provide above average returns over time, diversification for U.S. investors and are an important source of investment returns. We buy stocks that we believe have the best balance of attractive attributes — primarily those selling at below average valuation, but also experiencing above average earnings growth. We believe this balance of growth and value will enable us to outperform in all types of market environments.
Key Principles of our Approaches
Focus on Earnings Growth and Relative Valuation
In regions and sectors where companies have similar valuations, our process seeks those companies with the highest earnings growth. In areas where earnings growth is similar, the process seeks the companies with the best relative valuation.
Sector-Specific Models for each Region
Our proprietary, multi-factor models are tailored to each region and sector, because as history shows that characteristics of successful companies have often varied across both regions and sectors.
Region Neutral Portfolios
We build diversified portfolios of what we believe are the strongest companies within each region, and have region allocations that are similar to the benchmarks. Since currency has often been a major component of total return, this approach is designed to diversify the portfolio away from short term currency fluctuations which are difficult to predict.
Rigorous Sell Discipline
The Sell decision is the most important investment decision and is the initial discussion of the weekly team meeting. Our studies indicate that stocks that have met one "sell" characteristic exhibit poor relative performance over the near-term. We strive to maintain a portfolio of stocks that have the best combination of earnings growth and fundamental characteristics. The consistent application of our sell discipline is an integral part of the success of the overall investment process.