In a special report in Morningstar FundInvestor, analyst Russel Kinnel highlights a trio of foreign large-caps that are Morningstar Medalists and also pursue value strategies.
Causeway International Value (CIVVX)
Causeway is a deep value 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 noteworthy for its rule against owning emerging markets stocks, so investors are getting developed markets exposure only.
Tweedy, Browne Global Value (TBGVX)
Tweedy, Browne Global Value has energy and materials stocks, too, but only in line with the foreign large-value average.
The fund hedges its currency exposure and that’s been a boon recently because of the strengthening 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. The fund now has stellar returns over the trailing three-, five-, ten-, and 15-year periods, but it is still prone to stretches when it falls out of favor.
Vanguard International Value (VTRIX)
Vanguard International Value 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.
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