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Intrinsic Value Global Strategy
Ariel International (DM)

Why Ariel’s global approach

Experience matters

  • Rupal J. Bhansali has more than 25 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
Style: International equity - intrinsic value
Market Cap: All Cap
Inception: December 31, 2011
Number of companies: 50-150
Turnover: typically 30-80%
Net Assets: $1,815.4 million
as of 9/30/2019
Portfolio Manager
Bhansali_Rupal_Web.png Rupal J. Bhansali
Portfolio Manager

Our global investment philosophy


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


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


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


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

Ariel International (DM)

Schedule of Holdings

As of September 30, 2019
  Units Security Description Market Value % of Total Value
BELGIUM     471,861 0.3
  3,096 Galapagos NV 471,861 0.3
CANADA     3,830,261 2.0
  53,974 Suncor Energy, Inc. 1,703,605 0.9
  46,412 IGM Financial Inc. 1,318,746 0.7
  10,028 Magna International 534,877 0.3
  619 Fairfax Financial Holdings Ltd. 273,033 0.1
CHINA     3,765,229 2.0
  36,641 Baidu, Inc. ADR 3,765,229 2.0
FINLAND     6,167,245 3.3
  971,353 Nokia Corp. ADR 4,915,046 2.6
  212,403 Nokia Corp. 1,076,762 0.6
  6,218 Nokian Renkaat Corp. 175,437 0.1
FRANCE     9,944,981 5.3
  70,478 Michelin (CGDE) 7,867,915 4.2
  10,436 Safran 1,643,455 0.9
  3,770 Thales SA 433,611 0.2
GERMANY     20,965,285 11.2
  101,456 Deutsche Boerse AG 15,844,498 8.5
  1,734,084 Telefonica Deutschland Holding 4,841,566 2.6
  10,825 Rocket Internet SE 279,221 0.1
HONG KONG     9,945,351 5.4
  1,138,198 China Mobile Ltd. 9,415,534 5.1
  4,666,794 Li & Fung Ltd. 529,817 0.3
ITALY     5,433,389 2.9
  1,036,140 Snam SpA 5,234,565 2.8
  30,796 Italgas Spa 198,824 0.1
JAPAN     44,422,272 24.1
  31,000 Nintendo Co., Ltd. 11,479,251 6.2
  274,500 NTT DOCOMO, Inc. 6,992,353 3.8
  127,700 Nippon Telegraph & Telephone Corp. 6,092,262 3.3
  222,800 Japan Tobacco Inc. 4,877,583 2.6
  157,200 Subaru Corp 4,421,818 2.4
  105,500 Bridgestone Corp 4,084,312 2.2
  18,400 Daito Trust Construction Co., Ltd. 2,351,182 1.3
  17,800 Secom Co., Ltd. 1,623,617 0.9
  39,900 Mabuchi Motor Co Ltd 1,485,982 0.8
  6,000 Shimamura Co., Ltd. 475,226 0.3
  20,000 Ono Pharmaceutical Co Ltd 362,156 0.2
  23,700 Shizuoka Bank Ltd. 176,530 0.1
LUXEMBOURG     1,831,613 1.0
  44,793 Tenaris ADR 948,716 0.5
  18,281 RTL Group 882,897 0.5
NETHERLANDS     10,126,959 5.4
  404,665 Ahold N.V. 10,126,959 5.4
SINGAPORE     454,461 0.2
  74,200 Singapore Exchange Ltd 454,461 0.2
SPAIN     6,620,595 3.6
  133,866 Endesa SA 3,523,008 1.9
  126,056 Tecnicas Reunidas SA 3,097,587 1.7
SWITZERLAND     20,184,851 10.9
  44,775 Roche Holding AG 13,042,069 7.0
  10,063 Swisscom AG 4,968,174 2.7
  8,599 Kuehne & Nagel Intl AG 1,267,666 0.7
  37,214 UBS AG 422,840 0.2
  74 SGS SA 183,599 0.1
  2,046 NOVARTIS AG ADR SPONSORED 177,797 0.1
  1,130 Nestle SA 122,706 0.1
UAE     241,594 0.1
  1,037,908 Dubai Financial Market 241,594 0.1
UNITED KINGDOM     16,838,646 9.0
  548,637 GlaxoSmithKline plc 11,794,981 6.3
  44,761 Reckitt Benckiser Group plc 3,499,284 1.9
  127,890 National Grid PLC 1,389,864 0.7
  60,633 Kingfisher PLC 154,517 0.1
UNITED STATES     10,663,532 5.6
  97,927 PHILIP MORRIS INTL INC COM 7,435,597 4.0
  18,783 EOG Resources Inc. 1,394,074 0.7
  10,916 PIONEER NAT RES CO COM 1,372,905 0.7
  24,096 Fluor Corp. 460,956 0.2
Total Equities     171,908,125 92.3
Forward Position Short     -280,513 -0.2
Cash Balance     14,734,129 7.9
Grand Total     186,361,741 100.0

Ariel International (DM)

Product Materials

Portfolio Manager Letters:
Ariel International (DM) (Representative Portfolio)

Sector Weightings (%)

As of September 30, 2019
  Ariel International (DM) MSCI EAFE
Communication Services 28.18 5.36
Consumer Staples 15.16 12.00
Health Care 15.04 11.59
Financials 10.90 18.56
Consumer Discretionary 10.78 11.49
Utilities 6.02 3.79
Energy 4.95 5.13
Industrials 4.13 14.73
Information Technology 3.49 6.74
Real Estate 1.37 3.60
Materials 0.00 7.00

Represents percentage of total equity holdings in the representative portfolio

MSCI EAFE Index is an unmanaged, market-weighted index of companies in developed markets, excluding the U.S. and Canada. 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.

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

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

Quarter End
Month End

Ariel International (DM) Composite Performance

As of October 31, 2019
Inception date: December 31, 2011 Annualized
To Date
Gross of Fees 1.99% 5.15% 11.39% 7.32% 5.95% 4.37% 6.96%
Net of Fees 1.92% 4.94% 10.65% 6.47% 5.11% 3.54% 6.08%
MSCI EAFE 3.59% 3.80% 16.86% 11.04% 8.48% 4.31% 7.24%

Ariel International (DM) Composite Performance

As of September 30, 2019
Inception date: December 31, 2011 Annualized
To Date
Gross of Fees 2.93% 0.91% 9.21% -0.81% 3.54% 3.79% 6.76%
Net of Fees 2.86% 0.71% 8.56% -1.59% 2.72% 2.97% 5.89%
MSCI EAFE 2.87% -1.07% 12.80% -1.34% 6.48% 3.27% 6.83%

Ariel Investments, LLC is a money management firm headquartered in Chicago, Illinois, with offices in New York and Sydney. 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 international (DM) strategy seeks long-term capital appreciation as a primary objective. The strategy’s secondary objective is 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 foreign (non-U.S.) companies in developed international markets. The strategy will invest in foreign securities by purchasing equity securities directly or through instruments that provide exposure to foreign companies. The strategy may invest in companies of any size. The strategy also may invest a portion of its assets in equity securities (or other instruments) of companies based in the U.S. or emerging markets. The Ariel International (DM) Composite differs from its benchmark, the MSCI EAFE Index, because: (i) the Composite has fewer holdings than the benchmark, (ii) the Composite will invest in Canada, and (iii) the Composite will at times invest a portion of its assets in the U.S. and emerging markets.

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 in an attempt to decrease the strategy’s exposure to changing security prices or foreign currency risk, or to reduce unintended tracking error versus its respective benchmarks, or to 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. 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 International (DM) Composite has been examined for the period from January 1, 2012 through December 31, 2018. 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 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. The intrinsic value of the stocks in which the portfolio invests may never be recognized by the broader market. Click here to obtain a presentation that adheres to the GIPS standards.

Index returns reflect the reinvestment of income and other earnings. Indexes are unmanaged, and investors cannot invest directly in an index. MSCI EAFE Index is an unmanaged, market-weighted index of companies in developed markets, excluding the U.S. and Canada. The MSCI EAFE 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.

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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