Share  |  Print
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
Facts
Style: International equity - intrinsic value
Market Cap Range: All Cap
Inception: December 31, 2011
Number of companies: 50-150
Turnover: 30-80%
Net Assets: $1,563.7 million
as of 9/30/2017
 
Portfolio Manager
Bhansali_Rupal_Web.png Rupal J. Bhansali
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
  • Three team members with clearly defined roles vet each stock

 
RB-Int-Global-Investing1.png
Rupal Bhansali on International and Global Investing I
 
RB-Int-Global-Investing2.png
Rupal Bhansali on International and Global Investing II
Ariel International (DM)

Schedule of Holdings

As of September 30, 2017
  Units Security Description Market Value % of Total Value
AUSTRALIA     362,744 0.2
  95,748 AMP Ltd. 362,744 0.2
BELGIUM     108,922 0.1
  1,069 Galapagos NV 108,922 0.1
CANADA     2,494,297 1.5
  40,332 IGM Financial Inc. 1,355,964 0.8
  13,286 Suncor Energy, Inc. 465,740 0.3
  8,255 Magna International 440,652 0.3
  12,735 Hydro One LTD 231,941 0.1
CHINA     5,862,907 3.5
  23,350 Baidu, Inc. ADR 5,783,562 3.5
  10,127 Shenzhou International Group 79,345 0.0
DENMARK     242,783 0.1
  5,078 Novo Nordisk A/S 242,783 0.1
FINLAND     9,193,634 5.5
  1,537,397 Nokia Corp. ADR 9,193,634 5.5
FRANCE     10,251,906 6.1
  46,688 Michelin (CGDE) 6,816,371 4.1
  22,984 Safran 2,348,666 1.4
  5,922 Thales SA 670,539 0.4
  2,044 Euler Hermes Group 241,636 0.1
  1,759 Sanofi 174,694 0.1
GERMANY     18,961,857 11.4
  93,884 Deutsche Boerse AG 10,178,628 6.1
  1,156,651 Telefonica Deutschland Holding 6,492,232 3.9
  42,357 Dialog Semiconductor plc 1,870,989 1.1
  5,956 GEA Group AG 271,009 0.2
  2,124 Drillisch AG 148,999 0.1
HONG KONG     9,734,862 5.8
  767,198 China Mobile Ltd. 7,774,000 4.7
  3,094,794 Li & Fung Ltd. 1,553,116 0.9
  8,063 China Mobile Ltd. ADR 407,746 0.2
ITALY     5,416,076 3.3
  963,614 Snam SpA 4,643,209 2.8
  19,622 Azimut Holdings SpA 424,498 0.3
  62,039 Italgas Spa 348,369 0.2
JAPAN     28,752,522 17.2
  16,300 Nintendo Co., Ltd. 6,020,512 3.6
  214,200 NTT DOCOMO, Inc. 4,893,362 3.0
  77,200 Nippon Telegraph & Telephone Corp. 3,538,219 2.1
  26,600 Shimamura Co., Ltd. 3,191,433 1.9
  90,300 Japan Tobacco Inc. 2,959,709 1.8
  433,900 Seven Bank Ltd. 1,565,619 0.9
  6,700 Daito Trust Construction Co., Ltd. 1,220,672 0.7
  32,700 Subaru Corp 1,179,897 0.7
  14,900 Toyota Motor Corp. 888,544 0.5
  9,900 Secom Co., Ltd. 721,648 0.4
  13,900 Mabuchi Motor Co Ltd 695,494 0.4
  19,400 Canon Inc. 662,931 0.4
  2,100 Murata Manufacturing Co., Ltd. 308,692 0.2
  6,800 Chugai Pharmaceutical Co., Ltd. 282,225 0.2
  1,600 Takeda Pharmaceutical Co Ltd 88,361 0.1
  9,800 Ono Pharmaceutical Co Ltd 222,050 0.1
  9,100 Japan Exchange Group, Inc. 161,021 0.1
  5,400 Askul Corp 152,133 0.1
LUXEMBOURG     2,303,834 1.4
  15,878 RTL Group 1,202,065 0.7
  38,918 Tenaris ADR 1,101,769 0.7
NETHERLANDS     12,492,695 7.5
  385,001 Ahold N.V. 7,200,279 4.3
  85,194 Gemalto N.V. 3,806,487 2.3
  15,055 Core Laboratories N.V. 1,485,929 0.9
SINGAPORE     573,259 0.3
  23,300 United Overseas Bank Ltd. 403,777 0.2
  31,100 Singapore Exchange Ltd 169,482 0.1
SPAIN     5,678,412 3.5
  143,702 Endesa SA 3,240,472 2.0
  77,108 Tecnicas Reunidas SA 2,437,940 1.5
SWEDEN     403,417 0.2
  15,571 H&M Hennes & Mauritz AB 403,417 0.2
SWITZERLAND     15,774,181 9.5
  32,464 Roche Holding AG 8,289,965 5.0
  10,868 Swisscom AG 5,570,685 3.4
  360 SGS SA 863,881 0.5
  32,271 UBS AG 551,712 0.3
  3,816 NOVARTIS AG ADR SPONSORED 327,604 0.2
  41 Givaudan SA 89,238 0.1
  968 Nestle SA 81,096 0.0
UAE     313,755 0.2
  1,037,908 Dubai Financial Market 313,755 0.2
UNITED KINGDOM     13,880,682 8.4
  445,153 GlaxoSmithKline plc 8,877,891 5.4
  37,173 Reckitt Benckiser Group plc 3,393,264 2.0
  129,925 National Grid PLC 1,609,527 1.0
UNITED STATES     9,214,915 5.6
  77,337 Vanguard FTSE Developed ETF 3,357,199 2.0
  20,772 PHILIP MORRIS INTL INC COM 2,305,900 1.4
  16,330 EOG Resources Inc. 1,579,764 1.0
  12,436 Occidental Petroleum Corp. 798,516 0.5
  16,643 Fluor Corp. 700,670 0.4
  3,205 PIONEER NAT RES CO COM 472,866 0.3
Total Equities     152,017,660 91.3
Forward Position Short     -440,527 -0.3
Cash Balance     14,240,956 9.0
Grand Total     165,818,089 100.0

Ariel International (DM)

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 International (DM) (Representative Portfolio)

Sector Weightings (%)

As of September 30, 2017
  Ariel International (DM) MSCI EAFE
Telecommunication Services 19.39 4.07
Information Technology 18.60 6.31
Health Care 12.52 10.57
Consumer Staples 10.72 11.22
Consumer Discretionary 10.70 12.20
Financials 10.58 21.46
Energy 8.74 5.05
Industrials 4.22 14.41
Utilities 3.65 3.35
Real Estate 0.82 3.54
Materials 0.06 7.81

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:
    A team of three 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, sector weights at the higher of 25% or 1.5x benchmark, hedge currency if practical and cost-efficient
  • Benefit:
    Designed to generate superior long-term, risk-adjusted performance

You may also be interested in
Ariel Investments Director of Research for International & Global Equities Chaim Schneider discusses the research process for the Ariel Global Strategy.
Portfolio Manager Rupal Bhansali shares her unique approach to managing risk.
 
Quarter End
Month End

Ariel International (DM) Composite Performance

As of November 30, 2017
Inception date: December 31, 2011 Annualized
  One
Month
Three
Months
Year
To Date
One
Year
Three
Years
Five
Years
Since
Inception
Gross of Fees 1.84% 0.05% 16.08% 19.31% 5.81% 9.82% 8.82%
Net of Fees 1.77% -0.14% 15.24% 18.36% 4.97% 8.93% 7.92%
MSCI EAFE 1.05% 5.14% 23.06% 27.27% 5.97% 8.24% 9.26%

Ariel International (DM) Composite Performance

As of September 30, 2017
Inception date: December 31, 2011 Annualized
  One
Month
Three
Months
Year
To Date
One
Year
Three
Years
Five
Years
Since
Inception
Gross of Fees 0.88% 2.79% 17.04% 11.12% 6.44% 10.62% 9.24%
Net of Fees 0.81% 2.59% 16.34% 10.24% 5.60% 9.71% 8.33%
MSCI EAFE 2.49% 5.40% 19.96% 19.10% 5.04% 8.38% 9.06%


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, 2016. 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.

Check the background of this firm on FINRA's BrokerCheck
Ariel Distributors, LLC is a member of the Securities Investor Protection Corporation