This top Canadian global equity fund performs well in almost any time frame. It does so by seeking bargain stocks of companies that trade at a discount to their present intrinsic value.
Mawer International Equity Fund (Fund code: MAW102 (NL)) is an ideal choice if you’re looking for non-North American equity exposure. This top Canadian fund’s objectives are to achieve above-average long-term, risk-adjusted returns and to provide diversification of risk by investing primarily in global stocks outside Canada and the U.S.
The fund’s managers try to accomplish these objectives by investing in companies they believe will be wealth-creating in the long term and trade at a discount to intrinsic value right now. They prefer companies with enduring competitive advantages that earn a greater return on capital than their cost of capital over the long term.
Bargain hunting and value investing
This formula for investing has been a resounding success in almost any time frame you look at. Over the past 10 years, the fund’s compound annual growth rate is 7.0 per cent, a top-quartile performance in the international equity category. The fund has also performed in the top-quartile in each of the past one-, three-, five- and 10-year periods.
Results have been consistently strong. In fact, the fund has performed in the top half of the category in nine of the past 10 years.
Meanwhile, volatility, at least in recent years, has been slightly less than the category average.
For most of the past 10 years, the fund has been managed by the same portfolio advisers. David Ragan has been a manager of the fund since November 2007, while Jim Hall has been with the fund since March 2010. Their experience should be a favorable factor in terms of future returns.
Several factors determine choice of global stocks
How much of the assets the managers invest in any one country varies depending upon the economic, investment, and market outlook and opportunities in each area. Currently, the fund’s geographic breakdown includes: the U.K., 26 per cent; Switzerland, 11 per cent; Japan, seven per cent; the U.S., seven per cent; Germany, seven per cent; Ireland, six per cent; Sweden, four per cent; China, four per cent; Singapore, four per cent; and South Korea, three per cent.
Risk is reduced by not concentrating more than 20 per cent of the fund’s assets in a particular industry sector. The fund’s industry breakdown is as follows: financials, 21 per cent; consumer staples, 20 per cent; industrials, 13 per cent; consumer discretionary, 12 per cent; health care, 11 per cent; materials, eight per cent; technology, seven per cent, telecommunications, five per cent; and cash, three per cent. There are no energy or utility stocks in the portfolio.
Top holdings include AON (U.K.: insurance), 3.9 per cent; Intertek Group (U.K.: product testing), 3.8 per cent; Nestle (Switzerland: food), 3.3 per cent; and Markit Ltd. (North America: financial), 3.0 per cent.
The fund’s management expense ratio is a competitive 1.47 per cent. Mawer International Equity Fund is a buy.
Money Reporter, MPL Communications Inc.
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