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Ariel Global

Our global investment philosophy


Patience

We take the long-term view.
  • Complementary objectives: Higher absolute and relative returns over a full market cycle with less risk
  • Focus research as much on what can go wrong as what can go right

Independence

We invest to our convictions, not to benchmarks.
  • Benchmark aware only to the extent that tracking error is by design and not by default
  • Significant exposure to our highest-conviction ideas, tempered with prudent risk controls

Expertise

We specialize in bottom-up fundamental research.
  • Ask questions to gain insight, not just information
  • Conduct in-country visits
  • Take business analyst approach rather than stock analyst approach
  • Research a company’s global peers to inform our competitive assessment

Teamwork

We work collaboratively with a shared commitment to excellence.
  • Debate best, base and worst case scenarios for every company considered
  • Three team members with clearly defined roles vet each stock

 
RB-Int-Global-Investing1.png
Rupal Bhansali on International and Global Investing I
 
RB-Int-Global-Investing2.png
Rupal Bhansali on International and Global Investing II

Why Ariel’s global approach


Our emphasis is on generating attractive absolute and relative returns while seeking to limit downside risk in our global portfolios.

Experience matters

Rupal J. Bhansali, our chief investment officer for international equities, has more than 20 years of industry experience.

Managing risk is a top priority

We pay as much attention to risk management as to return management.

Screening out provides a stronger starting point

While others screen in, we begin our process by screening out high-risk companies.

All-cap portfolios offer larger opportunity set

Although our portfolios are relatively concentrated, we consider companies of all sizes.

Attention to business models builds more resilient portfolios

In addition to applying our financial models, we consider the long-term viability of each company’s business model.

Facts
Market Cap Range: All Cap
Inception: December 31, 2011
Number of companies: 50-150
Turnover: 30-80%
Net Assets: $547.4 million as of 03/31/2014
 
Portfolio Manager
Bhansali_Rupal_Web.png Rupal J. Bhansali
Portfolio Manager
 
Ariel Global

Schedule of Holdings

As of March 31, 2014
  Units Security Description Market Value % of Total Value
    111,728 0.1
  1 Forward Position Long 111,728 0.1
BRAZIL     691,213 0.3
  32,543 Telefonica Brasil SA ADR 691,213 0.3
CANADA     3,735,892 1.7
  6,103 Fairfax Financial Holdings Ltd. 2,655,571 1.2
  28,189 Canadian Oil Sands 592,589 0.3
  8,800 Tim Hortons Inc. 487,732 0.2
CHINA     2,292,621 1.1
  12,155 Baidu, Inc. ADR 1,850,842 0.9
  13,652 Mindray Medical Intl Ltd. 441,779 0.2
FINLAND     3,139,725 1.5
  422,494 Nokia Corp. 3,139,725 1.5
FRANCE     7,127,683 3.3
  100,809 Eutelsat Communications 3,426,088 1.6
  18,797 Technip SA 1,941,380 0.9
  22,802 BNP Paribas SA 1,760,215 0.8
GERMANY     10,431,163 4.9
  93,756 Deutsche Boerse AG 7,467,647 3.5
  207,346 Telefonica Deutschland GmbH & Co. 1,654,080 0.8
  52,969 Dialog Semiconductor plc 1,309,436 0.6
HONG KONG     7,776,051 3.6
  700,500 China Mobile Ltd. 6,412,073 3.0
  419,000 Yue Yuen Industrial 1,363,978 0.6
IRELAND     799,816 0.4
  13,600 Ryanair Holdings plc ADR 799,816 0.4
ITALY     3,215,966 1.5
  548,833 Snam SpA 3,215,966 1.5
JAPAN     19,542,975 9.1
  119,700 Canon Inc. 3,708,376 1.7
  39,000 Shimamura Co., Ltd. 3,381,262 1.6
  48,500 Tokyo Electron Ltd. 2,978,277 1.4
  28,000 Daito Trust Construction Co., Ltd. 2,596,388 1.2
  21,500 Nintendo Co., Ltd 2,559,126 1.2
  35,000 Toyota Motor Corp. 1,979,709 0.9
  59,200 Japan Tobacco Inc. 1,862,214 0.9
  29,600 Nikon Corp. 477,623 0.2
NETHERLANDS     12,713,048 6.0
  382,618 Ahold N.V 7,691,397 3.6
  137,425 Royal Dutch Shell plc 5,021,651 2.4
SINGAPORE     548,695 0.4
  20,000 United Overseas Bank Ltd. 344,441 0.2
  27,000 Oversea-Chinese Banking Corp. Ltd. 204,254 0.2
SPAIN     2,379,342 1.1
  42,086 Tecnicas Reunidas SA 2,379,342 1.1
SWEDEN     571,995 0.3
  5,700 Autoliv Inc. 571,995 0.3
SWITZERLAND     19,859,675 9.3
  34,696 Roche Holding AG 10,411,550 4.9
  11,843 Zurich Insurance Group Ltd 3,639,667 1.7
  4,231 Swisscom AG 2,601,555 1.2
  29,157 Nestle SA 2,197,258 1.0
  48,829 UBS AG 1,009,645 0.5
TURKEY     1,029,054 0.5
  24,949 BIM Birlesik Magazalar A.S. 562,251 0.3
  33,900 Turkcell Iletisim Hizmetleri AS ADR 466,803 0.2
UNITED KINGDOM     17,255,267 8.0
  285,166 GlaxoSmithKline plc 7,569,074 3.5
  1,013,088 Tesco plc 4,991,097 2.3
  321,140 HSBC Holdings plc 3,253,712 1.5
  17,856 Croda Intl plc 758,195 0.4
  107,942 British Telecom Group plc 683,189 0.3
UNITED STATES     95,860,505 44.8
  284,900 Microsoft Corp. 11,678,051 5.5
  109,300 Johnson & Johnson 10,736,539 5.0
  145,864 Gilead Sciences, Inc. 10,335,923 4.8
  77,400 Harman Intl Industries Inc. 8,235,360 3.9
  107,665 Quest Diagnostics Inc. 6,235,957 2.9
  186,486 Broadcom Corp. 5,868,714 2.7
  219,844 Tumi Holdings Inc. 4,975,070 2.3
  322,436 Acacia Research Corporation 4,926,822 2.3
  81,000 U.S. Bancorp 3,471,660 1.6
  24,900 Praxair, Inc. 3,261,153 1.5
  178,046 NVIDIA Corp. 3,188,804 1.5
  39,500 Wal-Mart Stores, Inc. 3,018,985 1.4
  28,100 Philip Morris Intl Inc. 2,300,547 1.1
  35,783 Vanguard Total Wld Stock Index Fd (ET 2,135,172 1.0
  174,967 Ruckus Wireless, Inc. 2,127,599 1.0
  41,600 Coach, Inc. 2,065,856 1.0
  18,200 The PNC Financial Service Group, Inc. 1,583,400 0.7
  11,500 Berkshire Hathaway Inc. 1,437,155 0.7
  36,063 Expeditors Intl of Washington 1,429,177 0.7
  50,329 EMC Corp. 1,379,518 0.6
  14,408 Occidental Petroleum Corp. 1,372,938 0.6
  92,000 QLogic Corp. 1,173,000 0.5
  54,081 TIBCO Software Inc. 1,098,926 0.5
  10,418 Global Payments Inc. 740,824 0.3
  10,203 C.H. Robinson Worldwide, Inc. 534,535 0.3
  4,244 National Oilwell Varco 330,480 0.2
  1,800 M&T Bank Corp. 218,340 0.2
Total Equities     209,082,414 97.9
Cash Balance     4,475,730 2.1
Grand Total     213,558,144 100.0

Ariel Global

Commentary

 
Monthly Commentary: Perspectives on the current market
Quarterly Commentary: Quarterly performance update and communication to investors
Turtle Thoughts: A compilation of our portfolio manager letters
Fact Sheets: Quarterly product overview
Ariel Global (Representative Portfolio)

Sector Weightings (%)

As of December 31, 2013
  Ariel Global MSCI ACWI
Information Technology 24.41 12.48
Health Care 23.48 10.27
Financials 12.74 21.53
Consumer Discretionary 11.98 11.96
Consumer Staples 11.27 9.78
Telecommunication Services 5.50 4.16
Energy 3.55 9.78
Industrials 3.39 10.98
Materials 1.95 5.94
Utilities 1.50 3.12

Represents percentage of total equity holdings in the representative portfolio

MSCI ACWI (All Country World Index) IndexSM is an unmanaged, market-weighted index of global developed and emerging markets. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI.

These sectors are the Global Industry Classification Standard (“GICS”). GICS was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed for use by Ariel Investments, LLC. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

Quarter End
Month End
Ariel Global Composite

Performance

As of March 31, 2014
Inception date: December 31, 2011 Annualized
  One
Month
Three
Months
Year To
Date
One
Year
Since
Inception
Gross of Fees 0.54% 2.98% 2.98% 23.44% 18.64%
Net of Fees 0.47% 2.78% 2.78% 22.27% 17.49%
MSCI AC World Index 0.50% 1.21% 1.21% 17.17% 18.29%
Ariel Global Composite

Performance

As of March 31, 2014
Inception date: December 31, 2011 Annualized
  One
Month
Three
Months
Year To
Date
One
Year
Since
Inception
Gross of Fees 0.54% 2.98% 2.98% 23.44% 18.64%
Net of Fees 0.47% 2.78% 2.78% 22.27% 17.49%
MSCI AC World Index 0.50% 1.21% 1.21% 17.17% 18.29%


Ariel Investments, LLC is a money management firm headquartered in Chicago, Illinois. Taking a long-term view and applying independent thinking to our investment decisions, we span the market cap spectrum from micro to large and cover the globe with our international and global offerings. Ariel claims compliance with the Global Investment Performance Standards (GIPS®). The Ariel Global strategy seeks long-term capital appreciation by investing primarily in equity securities of both domestic issuers and foreign issuers, including foreign issuers in countries with developed or emerging markets. The Ariel Global Composite differs from its benchmark, the MSCI ACWI (All Country World Index) Index, with fewer holdings. Index returns reflect the reinvestment of income and other earnings. Indexes are unmanaged, and investors cannot invest directly in an index. Equity investments in foreign securities may be made in various forms, such as common stocks, preferred stocks, warrants, rights, convertible securities purchased on recognized foreign exchanges and developed over-the-counter markets, or in the form of depositary receipts such as American Depositary Receipts (ADRs) or Global Depositary Receipts (GDRs), or other securities representing underlying shares of foreign issues, including certificates of deposit issued by foreign banks and foreign branches of U.S. banks. The strategy may invest in large, medium, or small companies without regard to market capitalization. The strategy may use various techniques to hedge currency exposure, including derivatives, exchange-traded funds (ETFs), and other hedges. These techniques may include the following: buying and selling currency on a spot basis, entering into foreign currency forward contracts, buying and selling foreign currency options and securities, securities index options, futures contracts and related options, and entering into swap agreements. These techniques may be used for hedging purposes or to increase return through the use of derivatives as a substitute for securities or to reduce the risk of loss of certain holdings. The strategy may include the holding of cash or cash equivalents for defensive purposes. Cash equivalents are negotiable instruments, such as commercial paper, treasury bills, short-term government bonds, payable by third parties. Third parties may include foreign banks and foreign governments.

Performance results are net of transaction costs and reflect the reinvestment of dividends and other earnings. Net returns reflect the deduction of the maximum advisory fee in effect for the respective period. Effective 1/1/14 the maximum fee is 0.80% per annum. Fees for prior periods are available upon request. Actual fees may vary depending on, among other things, the applicable fee schedule and portfolio size. Fee information is available upon request and may also be found in Ariel’s Form ADV, Part 2. Results shown may be preliminary. Returns are calculated in U.S. dollars. The Ariel Global Composite has been examined for the period from January 1, 2012 through December 31, 2012. A copy of the examination report is available upon request. Past performance does not guarantee future results. Investments in foreign securities may underperform and may be more volatile than comparable U.S. stocks because of the risks involving foreign economies and markets, foreign political systems, foreign regulatory standards, foreign currencies and taxes. The use of currency derivatives, ETFs, and other hedges may increase investment losses and expenses and create more volatility. Investments in emerging and developing markets present additional risks, such as difficulties in selling on a timely basis and at an acceptable price. The intrinsic value of the stocks in which the portfolio invests may never be recognized by the broader market. Click here to obtain a complete list of composite descriptions or a presentation that adheres to the GIPS standards.

MSCI ACWI (All Country World Index) IndexSM is an unmanaged, market-weighted index of global developed and emerging markets. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI.

Our global process


Negative Screening

Negative screening strives for downside protection
  • Process:
    Screen on risk, not growth rate or valuation
  • Risk management:
    Eliminate approximately 60% of high-risk stocks in benchmark
  • Benefit:
    Potential downside protection

Bottom-up Research

Proprietary bottom-up research enables better stock picking
  • Process:
    Lead analysts perform research
  • Risk management:
    Assess the prospects and durability of a business franchise
  • Benefit:
    Proprietary insights enable better stock picking

Team Validation

Team validation avoids blind spots in our analysis
  • Process:
    A team of three debates and stress tests each idea
  • Risk management:
    Go beyond industry specialist, avoiding groupthink by assigning devil’s advocate and "fresh" analyst
  • Benefit:
    Ideas vetted from multiple perspectives yield more informed final decisions by portfolio manager

Portfolio Construction

Portfolios constructed to manage risks as well as long-term performance
  • Process:
    Seek to own top decile of investment opportunities uncovered
  • Risk management:
    Cap security position size at 5% at cost, typically limit sector weights at the higher of 25% or 1.5x benchmark, hedge currency if practical and cost efficient
  • Benefit:
    A diverse portfolio that balances long-term performance with risk management

Past performance does not guarantee future results. © Ariel Investments, LLC. The mutual funds offered by Ariel Investment Trust are distributed by Ariel Distributors, LLC. Use of this website is subject to our Terms & Conditions of use. Each of the investment products, mutual funds or services referred to in this site may be offered only to persons in the United States. This web site should not be considered a solicitation or offering of any investment products, funds or services to investors outside the United States. Original illustrations © Omar Rayyan 2007.