Harding Loevner: Time to Go Global

05/05/2015 10:00 am EST

Focus: FUNDS

Ian Wyatt

Publisher & Chief Investment Strategist, Wyatt Investment Research

The last five years has been one of the best periods to be invested in US stocks; the same is not true for other global stock markets, observes Ian Wyatt, editor of Million Dollar Portfolio.

In the last five years, the SPDR S&P 500 ETF (SPY) gained 73.3%. Over the same period, the iShares MSCI EAFE (EFA) international index has gained just 18%.

But the outperformance of US stocks will not continue indefinitely. In fact, things began to change at the start of 2015. Year-to-date the S&P 500 is up 2.5%, while the MSCI EAFE is up 9.6%. This could be the start of a period of outperformance for international stocks.

One compelling reason to invest overseas is that the valuations are much cheaper. As a value investor, I'm attracted to investments that are priced attractively. In the US, stocks aren't a great bargain anymore. But around the world, stocks are trading at lower valuations.

Looking forward to 2015 and beyond, I want to add exposure to international stocks. I've selected Harding Loevner International Equity (HLMNX), a top-performing large-cap growth fund.

Harding Loevner International Equity invests in 50-60 stocks, making it a fairly concentrated fund. The average market cap of an investment is more than $40 billion, which means these are truly large and established businesses.

Many of the holdings are companies that you've never heard about. Some of the better-known investments include Nestle SA (NSRGY), Roche Holding AG (RHHBY), Allianz SE (AZSEY), Anheuser-Busch InBev (BUD), and BMW (BAMXY).

A team of three investment managers lead Harding Loevner International Equity. Each of them has more than ten years of experience managing this fund and a team of 21 investment professionals supports them.

The fund's performance has been impressive. Harding Loevner International Equity has beaten its benchmark index for every period ranging from one to 15 years. In the last year, the fund has gained 8.2% versus 3.5% for its benchmark.

The expense ratio of 1.17% seems justified by the strong investment performance. The minimum investment size is $5,000.

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