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Intrinsic Value Global Strategy
Ariel Global Concentrated

Why Ariel’s global approach


Experience matters

  • Rupal J. Bhansali and Micky Jagirdar have over 25 and 15 years of industry experience, respectively

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
Style:
Global equity - intrinsic value
Market Cap: All Cap
Inception: December 31, 2019
Number of companies: 10-30
Turnover: typically 25-40%
Net Assets: $0.4 million
as of 6/30/2020
 
Portfolio Managers
Rupal J. Bhansali Rupal J. Bhansali
Co-Portfolio Manager
Micky Jagirdar Micky Jagirdar
Co-Portfolio Manager
 

Our global investment philosophy


Patience

We take the long-term view.
  • Emphasis on 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.
  • Focus on connecting information versus collecting information
  • Take business analyst approach rather than financial analyst approach
  • Have extensive interactions with management teams around the world
  • Research a company's global peers to fully 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
  • Team members with defined roles vet each stock


Our global process


Negative Screening

Negative screening seeks downside protection
  • Process:
    Screen on risk, not growth rate or valuation
  • Risk management:
    Eliminate approximately 60% of high-risk stocks in universe
  • Benefit:
    Position for 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:
    Team debates and stress tests each idea
  • Risk management:
    Incorporate macro and micro factors in scenario analyses; lead analyst presents balanced case versus a recommendation
  • Benefit:
    Ideas vetted from multiple perspectives yield more informed final decisions by portfolio manager(s)

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:
    Typically cap security position size at 5% at time of purchase, industry weights at the higher of 25% or 1.5x the benchmark*, hedge currency if practical and cost-efficient
  • Benefit:
    Designed to generate superior long-term, risk-adjusted performance

*Global Concentrated typically owns up to 15% at market and has no industry limits



Quarter End
Month End

Ariel Global Concentrated Composite Performance

As of June 30, 2020
Inception date: December 31, 2019 Annualized
  One
Month
Three
Months
Year
To Date
Since
Inception
Gross of Fees 1.61% 11.01% -2.42% -2.42%
Net of Fees 1.54% 10.79% -2.81% -2.81%
MSCI ACWI Index 3.20% 19.22% -6.25% -6.25%

Ariel Global Concentrated Composite Performance

As of June 30, 2020
Inception date: December 31, 2019 Annualized
  One
Month
Three
Months
Year
To Date
Since
Inception
Gross of Fees 1.61% 11.01% -2.42% -2.42%
Net of Fees 1.54% 10.79% -2.81% -2.81%
MSCI ACWI Index 3.20% 19.22% -6.25% -6.25%

Ariel Investments, LLC (Ariel) is a Delaware limited liability company and federally registered investment adviser regulated by the U.S. Securities and Exchange Commission. Ariel is headquartered in Chicago, Illinois, and has offices in New York, New York, Washington, DC, and Sydney, NSW, Australia. Ariel offers investment strategies that seek long-term capital appreciation by investing primarily in equity securities. Ariel utilizes a bottom-up, fundamental analysis to select quality company stocks. Taking a long-term view and applying independent thinking to our investment decisions, Ariel spans the market cap spectrum from micro to large and covers the globe with international and global offerings. Ariel claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

The Ariel global concentrated strategy seeks long-term capital appreciation as a primary objective. The strategy’s secondary objectives are to seek long-term capital preservation, to generate attractive absolute and risk-adjusted returns, and to attain higher relative returns compared to its benchmark over a full market cycle. The strategy invests primarily in equity securities of both U.S. and foreign (non-U.S.) companies, including companies in developed or emerging markets, with highly concentrated positions, such that the portfolio typically will hold large positions of 10-30 stocks. The strategy will invest in foreign securities by purchasing equity securities directly or through instruments that provide exposure to foreign companies. The strategy is permitted to invest in companies of any size, but typically will not invest in companies with market capitalizations below $1 billion. The Ariel Global Concentrated Composite differs from its benchmark, the MSCI ACWI (All Country World Index) Index, because the Composite has dramatically fewer holdings than the benchmark.

The strategy uses various techniques to hedge currency exposure, or to invest significant cash inflows in the market (i.e., reducing “cash drag”), including derivatives, exchange-traded funds (“ETFs”), and other hedges. The strategy will buy and sell currency on a spot basis and enter into foreign currency forward contracts. Ariel uses these techniques primarily in an attempt to reduce unintended tracking error versus its benchmark, decrease the strategy’s exposure to changing security prices or foreign currency risk, or address other factors that affect security values. The strategy will at times include the holding of cash or cash equivalents for defensive purposes.

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. 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. Past performance does not guarantee future results. Investments in foreign securities may underperform and may be more volatile 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 markets present additional risks, such as difficulties in selling on a timely basis and at an acceptable price. A concentrated portfolio may be subject to greater volatility than a more diversified portfolio. The intrinsic value of the stocks in which the portfolio invests may never be recognized by the broader market.

The Ariel Global Concentrated Composite has not yet been examined. Click here to obtain a presentation that adheres to the GIPS standards.

Index returns reflect the reinvestment of income and other earnings. Investors cannot invest directly in an index. MSCI ACWI (All Country World Index) Index is an unmanaged, market weighted index of global developed and emerging markets. The MSCI ACWI Index net returns reflect the reinvestment of income and other earnings, including the dividends net of the maximum withholding tax applicable to non-resident institutional investors that do not benefit from double taxation treaties. MSCI uses the maximum tax rate applicable to institutional investors, as determined by the companies' country of incorporation. 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.

Ariel Global Concentrated

Schedule of Holdings

As of June 30, 2020
  Security Description % of Total Value
BRAZIL   0.8
  BB Seguridade Participacoes ADR 0.8
CHINA   6.2
  Baidu, Inc. ADR 6.2
FINLAND   3.7
  Nokia Corp. ADR 3.7
FRANCE   2.0
  Michelin (CGDE) 1.7
  Vivendi SA ADR 0.3
GERMANY   6.5
  Telefonica Deutschland Holding 4.4
  Deutsche Boerse AG 1.2
  Rocket Internet SE 0.9
HONG KONG   10.5
  China Mobile Ltd. ADR 10.5
ISRAEL   0.3
  Check Point Software Technologies Ltd. 0.3
JAPAN   8.4
  Nintendo Co., Ltd. ADR 5.1
  Subaru Corp ADR 3.1
  NTT Docomo Inc. ADR 0.2
SWITZERLAND   3.1
  Roche Holding Ltd. ADR 3.1
UNITED KINGDOM   6.2
  GlaxoSmithKline plc ADR 6.2
UNITED STATES   42.6
  Microsoft Corp. 13.4
  Philip Morris Intl, Inc. 10.2
  Berkshire Hathaway Inc. 4.0
  Gilead Sciences, Inc. 4.0
  Johnson & Johnson 3.1
  Equity Commonwealth 2.4
  Amdocs Ltd. 1.3
  Foot Locker, Inc. 1.0
  Verizon Communications Inc. 0.9
  Interactive Brokers Group Inc 0.8
  EOG Resources Inc. 0.5
  NetApp Inc. 0.5
  Discover Financial Services 0.3
  Tapestry, Inc. 0.2
Total Equities   90.3
Cash Balance   9.7
Grand Total   100.0

Ariel Global Concentrated (Representative Portfolio)

Sector Weightings (%)

As of June 30, 2020
  Ariel Global Concentrated MSCI ACWI
Communication Services 30.64 9.37
Information Technology 21.24 20.69
Health Care 18.25 12.93
Consumer Staples 11.24 8.06
Financials 7.88 13.44
Consumer Discretionary 7.61 11.77
Real Estate 2.62 2.92
Energy 0.52 3.55
Utilities 0.00 3.20
Industrials 0.00 9.43
Materials 0.00 4.64

Represents percentage of total equity holdings in the representative portfolio

MSCI ACWI (All Country World Index) Index 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.

Ariel Global Concentrated

Product Materials

 
Portfolio Manager Letter:
Asia Pacific & Middle East Investors: View fact sheets, commentary, performance, recent press and collateral
Past performance does not guarantee future results. © Ariel Investments, LLC. This website and all of its content is for informational and educational purposes only and should not be considered to be investment advice or a recommendation to buy or sell any particular security. The mutual funds offered by Ariel Investment Trust are distributed by Ariel Distributors, LLC, a wholly-owned subsidiary of Ariel Investments, LLC. Use of this website is subject to our Terms & Conditions. The Ariel mutual funds 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 ineligible investors, investors for whom such products, funds or services are not suitable, or investors outside the United States.

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