Global Strategy
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
 
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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: $1,174.9 million
as of 12/31/2014
 
Portfolio Manager
Bhansali_Rupal_Web.png Rupal J. Bhansali
Portfolio Manager
 
Ariel Global

Schedule of Holdings

As of December 31, 2014
  Units Security Description Market Value % of Total Value
BRAZIL     3,147,647 0.9
  52,300 Telefonica Brasil SA ADR 924,664 0.3
  93,825 Itau Unibanco Holding SA ADR 1,220,663 0.3
  137,544 Souza Cruz SA 1,002,320 0.3
CANADA     981,115 0.3
  1,866 Fairfax Financial Holdings Ltd. 981,115 0.3
CHILE     3,383,853 1.0
  171,595 Banco Santander-Chile ADR 3,383,853 1.0
CHINA     8,270,068 2.3
  36,277 Baidu, Inc. ADR 8,270,068 2.3
FINLAND     5,618,018 1.6
  678,800 Nokia Corp. ADR 5,335,368 1.5
  11,508 Nokian Renkaat Corp. 282,650 0.1
FRANCE     8,304,797 2.4
  47,046 BNP Paribas SA 2,805,333 0.8
  71,139 Eutelsat Communications 2,307,432 0.7
  31,022 Technip SA 1,855,650 0.5
  14,667 Michelin (CGDE) 1,336,382 0.4
GERMANY     18,695,869 5.4
  156,374 Deutsche Boerse AG 11,209,864 3.2
  835,507 Telefonica Deutschland GmbH & Co. 4,464,263 1.3
  85,124 Dialog Semiconductor plc 3,021,742 0.9
HONG KONG     19,298,856 5.5
  1,536,000 China Mobile Ltd. 17,923,958 5.1
  381,500 Yue Yuen Industrial Holdings Ltd. 1,374,898 0.4
IRELAND     2,350,671 0.5
  21,900 Ryanair Holdings plc ADR 1,560,813 0.4
  8,844 Accenture plc 789,858 0.1
ISRAEL     230,460 0.1
  66,923 Bank Leumi Le-Israel BM 230,460 0.1
ITALY     2,699,373 0.8
  356,650 Snam SpA 1,770,082 0.5
  223,165 Mediaset SpA 929,291 0.3
JAPAN     27,071,413 7.8
  62,500 Shimamura Co., Ltd. 5,421,637 1.5
  39,600 Nintendo Co., Ltd. 4,163,467 1.2
  64,800 Toyota Motor Corp. 4,085,065 1.2
  33,200 Daito Trust Construction Co., Ltd. 3,793,811 1.1
  116,600 Canon Inc. 3,735,110 1.1
  95,100 Japan Tobacco Inc. 2,639,860 0.7
  18,000 Tokyo Electron Ltd. 1,384,419 0.4
  20,300 Denso Corp. 957,007 0.3
  66,600 Nikon Corp. 891,037 0.3
MEXICO     350,023 0.1
  33,786 Santander Mexico Financial Group ADR 350,023 0.1
NETHERLANDS     18,424,499 5.2
  615,185 Ahold N.V. 10,987,840 3.1
  64,450 Royal Dutch Shell plc ADR 4,314,928 1.2
  49,102 Royal Dutch Shell plc 1,649,371 0.5
  12,235 Core Laboratories N.V. 1,472,360 0.4
PORTUGAL     322,836 0.1
  31,997 Jeronimo Martins SGPS SA 322,836 0.1
SINGAPORE     944,459 0.3
  51,000 United Overseas Bank Ltd. 944,459 0.3
SPAIN     1,497,067 0.4
  34,079 Tecnicas Reunidas SA 1,497,067 0.4
SWITZERLAND     28,512,645 8.1
  58,148 Roche Holding AG 15,799,528 4.5
  52,903 Nestle SA 3,885,188 1.1
  11,946 Zurich Insurance Group Ltd 3,748,571 1.1
  6,760 Swisscom AG 3,555,817 1.0
  78,502 UBS AG 1,350,608 0.4
  84 SGS SA 172,933 0.0
TURKEY     1,683,109 0.2
  40,146 BIM Birlesik Magazalar A.S. 859,069 0.1
  54,500 Turkcell Iletisim Hizmetleri AS ADR 824,040 0.1
UNITED KINGDOM     26,417,878 7.5
  215,668 GlaxoSmithKline plc ADR 9,217,650 2.6
  394,650 GlaxoSmithKline plc 8,470,416 2.4
  516,120 HSBC Holdings plc 4,899,558 1.4
  32,816 Reckitt Benckiser Group plc 2,666,844 0.8
  173,558 British Telecom Group plc 1,086,937 0.3
  32,816 Indivior PLC 76,473 0.0
UNITED STATES     159,637,231 44.8
  256,500 Gilead Sciences, Inc. 24,177,690 6.8
  458,000 Microsoft Corp. 21,274,100 6.0
  160,791 Johnson & Johnson 16,813,915 4.7
  124,400 Harman Intl Industries, Inc. 13,274,724 3.7
  386,637 Tumi Holdings Inc. 9,174,896 2.6
  482,520 Acacia Research Corp. 8,173,889 2.3
  172,700 Broadcom Corp. 7,483,091 2.1
  111,440 Quest Diagnostics Inc. 7,473,166 2.1
  130,200 U.S. Bancorp 5,852,490 1.7
  397,826 QLogic Corp. 5,299,042 1.5
  94,079 Verizon Communications Inc. 4,401,016 1.2
  45,838 Wal-Mart Stores, Inc. 3,936,567 1.1
  45,200 Philip Morris Intl, Inc. 3,681,540 1.0
  304,374 Ruckus Wireless, Inc. 3,658,575 1.0
  58,455 Southern Co. 2,870,725 0.8
  18,500 Berkshire Hathaway Inc. 2,777,775 0.8
  29,200 The PNC Financial Service Group, Inc. 2,663,916 0.8
  81,000 EMC Corp. 2,408,940 0.7
  49,509 Coach, Inc. 1,859,558 0.5
  44,533 Vanguard FTSE Emerging Markets ETF 1,782,211 0.5
  13,692 Praxair, Inc. 1,773,936 0.5
  63,673 NVIDIA Corp. 1,276,644 0.4
  14,920 Schlumberger Ltd. 1,274,317 0.4
  11,673 Ansys, Inc. 957,186 0.3
  21,448 Expeditors Intl of Washington 956,795 0.3
  27,340 Altera Corp. 1,009,940 0.3
  9,113 Rockwell Collins, Inc. 769,866 0.1
  6,283 CME Group Inc. 556,988 0.1
  3,078 Panera Bread Co. 538,034 0.1
  5,400 State Street Corp. 423,900 0.1
  6,200 JPMorgan Chase & Co. 387,996 0.1
  2,900 M&T Bank Corp. 364,298 0.1
  2,088 American Express Co. 194,268 0.1
  2,185 Wisconsin Energy Corp. 115,237 0.0
Total Equities     337,841,887 95.3
Forward Position Short     -159,142 0.0
Cash Balance     16,570,050 4.7
Grand Total     354,252,795 100.0

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 September 30, 2014
  Ariel Global MSCI ACWI
Health Care 25.38 11.29
Information Technology 20.24 13.35
Consumer Discretionary 12.69 11.27
Financials 12.14 21.54
Consumer Staples 9.66 9.55
Telecommunication Services 8.08 3.91
Energy 5.72 9.43
Industrials 3.29 10.45
Utilities 2.19 3.29
Materials 0.61 5.75
Unclassified 0.00 0.17

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 December 31, 2014
Inception date: December 31, 2011 Annualized
  One
Month
Three
Months
Year To
Date
One
Year
Three
Years
Since
Inception
Gross of Fees -2.74% -0.17% 7.17% 7.17% 15.21% 15.21%
Net of Fees -2.80% -0.37% 6.31% 6.31% 14.14% 14.14%
MSCI AC World Index -1.89% 0.52% 4.71% 4.71% 14.72% 14.72%
Ariel Global Composite

Performance

As of December 31, 2014
Inception date: December 31, 2011 Annualized
  One
Month
Three
Months
Year To
Date
One
Year
Three
Years
Since
Inception
Gross of Fees -2.74% -0.17% 7.17% 7.17% 15.21% 15.21%
Net of Fees -2.80% -0.37% 6.31% 6.31% 14.14% 14.14%
MSCI AC World Index -1.89% 0.52% 4.71% 4.71% 14.72% 14.72%


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 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.