Why Ariel’s global approach
Experience matters
- Rupal J. Bhansali has more than 30 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
as of 3/31/2022
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
Schedule of Holdings
Security Description | % of Total Value | |
---|---|---|
BELGIUM | 0.4 | |
KBC Group NVÃ | 0.4 | |
BRAZIL | 1.5 | |
Telefonica Brasil SA ADR | 1.1 | |
BB Seguridade Participacoes ADR | 0.4 | |
CANADA | 0.3 | |
Element Fleet Management Corp. | 0.3 | |
CHINA | 9.5 | |
China Mobile, Ltd. | 5.1 | |
Baidu, Inc. ADR | 3.7 | |
Trip.com Group, Ltd. ADR | 0.5 | |
TravelSky Technology, Ltd. | 0.2 | |
DENMARK | 0.7 | |
H Lundbeck A/S | 0.6 | |
Novo Nordisk A/S | 0.1 | |
FINLAND | 2.3 | |
Nokia Corp. | 2.3 | |
FRANCE | 8.3 | |
Michelin (CGDE) | 4.7 | |
BNP Paribas SA | 1.3 | |
Sanofi | 1.1 | |
Thales SA | 0.9 | |
Safran SA | 0.2 | |
Societe BIC SA | 0.1 | |
GERMANY | 12.6 | |
Deutsche Boerse AG | 8.5 | |
Telefonica Deutschland Holding | 3.0 | |
Muenchener Rueckver AG | 0.9 | |
Fresenius Medical Care AG & Co. KGaA | 0.2 | |
HONG KONG | 1.3 | |
CLP Holdings, Ltd. | 1.3 | |
ISRAEL | 1.0 | |
Check Point Software Technologies, Ltd. | 1.0 | |
ITALY | 5.0 | |
Snam SpA | 4.3 | |
Italgas Spa | 0.7 | |
JAPAN | 15.1 | |
Nintendo Co., Ltd. | 5.3 | |
Bridgestone Corp. | 3.5 | |
Subaru Corp. | 3.4 | |
Secom Co., Ltd. | 1.5 | |
Japan Tobacco, Inc. | 0.5 | |
Sankyo Co., Ltd. | 0.4 | |
Ono Pharmaceutical Co., Ltd. | 0.2 | |
Mabuchi Motor Co., Ltd. | 0.2 | |
Daito Trust Construction Co., Ltd. | 0.1 | |
LUXEMBOURG | 0.3 | |
RTL Group | 0.3 | |
NETHERLANDS | 5.2 | |
Ahold N.V. | 5.2 | |
PERU | 1.5 | |
Credicorp, Ltd. | 1.5 | |
PORTUGAL | 0.1 | |
Jeronimo Martins SGPS SA | 0.1 | |
SINGAPORE | 0.1 | |
Singapore Exchange, Ltd. | 0.1 | |
SPAIN | 5.0 | |
Endesa SA | 4.5 | |
Tecnicas Reunidas SA | 0.5 | |
SWITZERLAND | 9.6 | |
Roche Holding AG | 8.2 | |
Novartis AG | 1.0 | |
Nestle SA | 0.4 | |
UNITED KINGDOM | 10.7 | |
GlaxoSmithKline plc | 6.3 | |
Direct Line Insurance Group PLC | 3.1 | |
Vodafone Group PLC | 0.6 | |
Close Brothers Group PLC | 0.3 | |
Reckitt Benckiser Group PLC | 0.2 | |
St James's Place PLC | 0.1 | |
AstraZeneca PLC ADR | 0.1 | |
UNITED STATES | 5.9 | |
Philip Morris International, Inc. | 5.9 | |
Total Equities | 96.4 | |
Forward Position Short | -0.1 | |
Cash Balance | 3.7 | |
Grand Total | 100.0 |
Product Materials
Sector Weightings (%)
Ariel International (DM) | MSCI EAFE | |
---|---|---|
Communication Services | 19.07 | 4.85 |
Health Care | 17.86 | 13.05 |
Financials | 16.86 | 17.71 |
Consumer Discretionary | 12.44 | 11.54 |
Consumer Staples | 12.19 | 10.19 |
Utilities | 10.79 | 3.39 |
Information Technology | 3.48 | 8.60 |
Industrials | 2.91 | 15.40 |
Energy | 0.52 | 4.14 |
Real Estate | 0.10 | 2.89 |
Materials | 0.00 | 8.23 |
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 over 60% of high-risk stocks in universe - Benefit:
Position for downside protection
Bottom-up Research
Proprietary bottom-up research enables better stock picking- Process:
Analysts perform fundamental 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 - 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
Ariel International (DM) Composite Performance
Inception date: December 31, 2011 | Annualized | |||||||
One Month |
Three Months |
Year To Date |
One Year |
Three Years |
Five Years |
Ten Years |
Since Inception |
|
---|---|---|---|---|---|---|---|---|
Gross of Fees | -4.25% | -6.12% | -5.42% | -2.18% | 4.73% | 3.94% | 6.33% | 6.34% |
Net of Fees | -4.31% | -6.30% | -5.67% | -2.96% | 3.90% | 3.11% | 5.47% | 5.47% |
MSCI EAFE Net Index | -6.47% | -7.53% | -12.00% | -8.15% | 4.44% | 4.77% | 5.77% | 6.44% |
MSCI EAFE Value Net Index | -5.06% | -5.72% | -4.74% | -3.53% | 2.64% | 2.68% | 4.65% | 5.12% |
Ariel International (DM) Composite Performance
Inception date: December 31, 2011 | Annualized | |||||||
One Month |
Three Months |
Year To Date |
One Year |
Three Years |
Five Years |
Ten Years |
Since Inception |
|
---|---|---|---|---|---|---|---|---|
Gross of Fees | 0.74% | -1.22% | -1.22% | 3.51% | 6.31% | 5.21% | 6.22% | 6.84% |
Net of Fees | 0.67% | -1.42% | -1.42% | 2.69% | 5.47% | 4.38% | 5.35% | 5.97% |
MSCI EAFE Net Index | 0.64% | -5.91% | -5.91% | 1.16% | 7.78% | 6.72% | 6.27% | 7.19% |
MSCI EAFE Value Net Index | 0.67% | 0.33% | 0.33% | 3.55% | 5.23% | 4.18% | 4.87% | 5.70% |
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, with offices in New York, San Francisco, and Sydney. 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 small 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 international (DM) 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 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 is permitted to invest in companies of any size, but typically will not invest in companies with market capitalizations below $1 billion. 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 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. The intrinsic value of the stocks in which the portfolio invests may never be recognized by the broader market. The portfolio is often concentrated in fewer sectors than its benchmarks, and its performance may suffer if these sectors underperform the overall stock market. Investing in equity stocks is risky and subject to the volatility of the markets.
The Ariel International (DM) Composite has been examined for the period from January 1, 2012 through December 31, 2020. A copy of the examination report is available upon request. Click here to obtain a GIPS Composite Report.
The MSCI EAFE Index is an unmanaged, market-weighted index of companies in developed markets, excluding the U.S. and Canada. The MSCI EAFE Value Index captures large and mid cap securities exhibiting overall value style characteristics across Developed Markets countries around the world, excluding the US and Canada. Investors cannot invest directly in an index. All MSCI 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. 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. Source: MSCI.