Our global investment philosophy
PatienceWe 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
IndependenceWe 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
ExpertiseWe 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
TeamworkWe 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
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.
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.
Schedule of Holdings
|Units||Security Description||Market Value||% of Total Value|
|1||Forward Position Long||283,589||0.1|
|32,543||Telefonica Brasil SA ADR||667,457||0.3|
|59,297||Souza Cruz SA||612,582||0.3|
|28,189||Canadian Oil Sands Ltd.||640,172||0.3|
|1,135||Fairfax Financial Holdings Ltd.||539,629||0.2|
|8,800||Tim Hortons Inc.||482,428||0.2|
|17,883||Baidu, Inc. ADR||3,340,723||1.5|
|13,652||Mindray Medical Intl Ltd.||430,038||0.1|
|29,689||BNP Paribas SA||2,014,436||0.9|
|93,756||Deutsche Boerse AG||7,277,582||3.3|
|52,969||Dialog Semiconductor plc||1,837,086||0.8|
|207,346||Telefonica Deutschland GmbH & Co.||1,714,821||0.8|
|893,000||China Mobile Ltd.||8,665,160||3.9|
|419,000||Yue Yuen Industrial||1,403,003||0.6|
|13,600||Ryanair Holdings plc ADR||758,880||0.3|
|39,000||Shimamura Co., Ltd.||3,834,551||1.7|
|28,000||Daito Trust Construction Co., Ltd.||3,292,004||1.5|
|24,800||Nintendo Co., Ltd.||2,968,411||1.3|
|40,400||Toyota Motor Corp.||2,426,393||1.1|
|59,200||Japan Tobacco Inc.||2,158,199||1.0|
|30,300||Tokyo Electron Ltd.||2,048,316||0.9|
|111,915||Royal Dutch Shell plc||4,629,942||2.1|
|3,451||Core Laboratories NV||576,524||0.3|
|20,000||United Overseas Bank Ltd.||361,451||0.1|
|34,401||Tecnicas Reunidas SA||2,128,273||1.0|
|34,696||Roche Holding AG||10,350,532||4.6|
|11,843||Zurich Insurance Group Ltd||3,570,411||1.6|
|24,949||BIM Birlesik Magazalar A.S.||572,079||0.3|
|33,900||Turkcell Iletisim Hizmetleri AS ADR||528,840||0.2|
|321,140||HSBC Holdings plc||3,256,995||1.5|
|107,942||British Telecom Group plc||710,689||0.3|
|17,856||Croda Intl plc||672,273||0.3|
|157,358||Gilead Sciences, Inc.||13,046,552||5.8|
|109,300||Johnson & Johnson||11,434,966||5.1|
|77,400||Harman Intl Industries, Inc.||8,315,082||3.7|
|270,046||Tumi Holdings Inc.||5,436,026||2.4|
|301,860||Acacia Research Corp.||5,358,015||2.4|
|90,480||Quest Diagnostics Inc.||5,310,271||2.4|
|47,839||Wal-Mart Stores, Inc.||3,591,274||1.6|
|220,193||Ruckus Wireless, Inc.||2,622,499||1.2|
|28,100||Philip Morris Intl, Inc.||2,369,111||1.1|
|35,783||Vanguard Total Wld Stock Index Fd (ET||2,226,776||1.0|
|18,200||The PNC Financial Service Group, Inc.||1,620,710||0.7|
|11,500||Berkshire Hathaway Inc.||1,455,440||0.7|
|24,276||Expeditors Intl of Washington||1,072,028||0.5|
|7,036||Panera Bread Co.||1,054,204||0.5|
|10,203||C.H. Robinson Worldwide, Inc.||650,849||0.3|
|10,042||Wisconsin Energy Corp.||471,171||0.2|
|4,244||National Oilwell Varco||349,493||0.1|
|3,345||State Street Corp.||224,985||0.1|
|1,800||M&T Bank Corp.||223,290||0.1|
|3,840||JPMorgan Chase & Co.||221,261||0.1|
|2,770||Rockwell Collins, Inc.||216,448||0.1|
Sector Weightings (%)
|Ariel Global||MSCI ACWI|
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.
|Inception date: December 31, 2011||Annualized|
|Gross of Fees||-0.43%||3.59%||7.35%||16.28%||17.95%|
|Net of Fees||-0.50%||3.39%||6.86%||15.26%||16.83%|
|MSCI AC World Index||-1.18%||2.95%||5.24%||16.50%||17.52%|
|Inception date: December 31, 2011||Annualized|
|Gross of Fees||2.04%||4.67%||7.82%||22.58%||18.80%|
|Net of Fees||1.97%||4.47%||7.39%||21.49%||17.67%|
|MSCI AC World Index||1.93%||5.23%||6.50%||23.58%||18.72%|
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 developed or emerging market countries. The Ariel Global Composite differs from its benchmark, the MSCI ACWI (All Country World Index) IndexSM, 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, 2013. 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. The MSCI ACWI Index (gross) returns reflect the reinvestment of income and other earnings, including the maximum possible dividends. 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 ScreeningNegative screening strives for downside protection
Screen on risk, not growth rate or valuation
- Risk management:
Eliminate approximately 60% of high-risk stocks in benchmark
Potential downside protection
Bottom-up ResearchProprietary bottom-up research enables better stock picking
Lead analysts perform research
- Risk management:
Assess the prospects and durability of a business franchise
Proprietary insights enable better stock picking
Team ValidationTeam validation avoids blind spots in our analysis
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
Ideas vetted from multiple perspectives yield more informed final decisions by portfolio manager
Portfolio ConstructionPortfolios constructed to manage risks as well as long-term performance
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
A diverse portfolio that balances long-term performance with risk management