The Navigator® International Equity/ADR strategy delivered annualized gains of 8.53% gross (5.34% net) versus the gains of 4.45% for the MSCI All Country World ex-USA Index over the ten years ending September 30, 2019. For the third quarter of 2019, the strategy had a loss of -2.68% gross (-3.41% net) versus the -1.80% loss in the MSCI All Country World ex-USA Index. For the 10 years ending June 2019, International Equity/ADR remains in the top 1% of Morningstar peer group managers in the U.S. Foreign Large Blend category and received its second consecutive PSN Top Guns Manager of the Decade Award from Informa Solutions for its performance for the 10-year period ending 2018.
Our positioning in Consumer Discretionary and Healthcare helped relative performance while positioning in Consumer Staples and Real Estate acted as a drag. Our holdings in Sekisui House Ltd and Sony Corporation helped performance in the quarter as positions in Grupo Financiero Galicia SA and Rio Tinto plc dampened performance.
From a country perspective, the portfolio benefited from strong performance in our positions in Japan and China while performance in the United Kingdom and Argentina lagged. The value characteristics of the strategy remain more compelling than both its U.S. and international benchmarks as the current P/E of 14.7 is less than that of the S&P 500 (18.9) and EAFE (16.3) with similar quality and business growth characteristics.
Top 5 Contributors
|Ticker||Quarter Ending June 30, 2019||Average Weight (%)||Contribution to Return (%)|
|SKHSY||Sekisui House, Ltd. Sponsored ADR||3.18||0.64|
|SNE||Sony Corporation Sponsored ADR||2.21||0.3|
|NXPI||NXP Semiconductors NV||1.6||0.19|
|IBDRY||Iberdrola SA Sponsored ADR||2.55||0.17|
Top 5 Detractors
|Ticker||Quarter Ending September 30, 2019||Average Weight (%)||Contribution to Return (%)|
|GGAL||Grupo Financiero Galicia SA Sponsored ADR Class B||0.79||-0.81|
|RIO||Rio Tinto plc Sponsored ADR||1.99||-0.37|
|SWRAY||Swire Pacific Limited Sponsored ADR Class A||1.19||-0.37|
|LVMUY||LVMH Moet Hennessy Louis Vuitton SE Unsponsored ADR||1.7||-0.36|
|NGLOY||Anglo American plc Sponsored ADR||1.66||-0.36|
This document may contain certain information that constitutes forward-looking statements which can be identified by the use of forward-looking terminology such as “may,” “expect,” “will,” “hope,” “forecast,” “intend,” “target,” “believe,” and/or comparable terminology (or the negative thereof). Forward looking statements cannot be guaranteed. No assurance, representation, or warranty is made by any person that any of Clark Capital’s assumptions, expectations, objectives, and/or goals will be achieved. Nothing contained in this document may be relied upon as a guarantee, promise, assurance, or representation as to the future.
The Composite Index of Leading Indicators, otherwise known as the Leading Economic Index (LEI), is an index published monthly by The Conference Board. It is used to predict the direction of global economic movements in future months. The index is composed of 10 economic components whose changes tend to precede changes in the overall economy. The Conference Board is an independent research association that provides its member organizations with economic and financial information.
The ISM Manufacturing Index is a widely-watched indicator of recent U.S. economic activity. The index is often referred to as the Purchasing Manager’s Index (PMI). Based on a survey of purchasing managers at more than 300 manufacturing firms by the Institute for Supply Management (ISM), the index monitors changes in production levels from month to month. The index is the core of the ISM Manufacturing Report.
The ISM Non-Manufacturing Index is an index based on surveys of more than 400 non-manufacturing firms’ purchasing and supply executives, within 60 sectors across the nation, by the Institute of Supply Management (ISM). The ISM Non-Manufacturing Index tracks economic data, like the ISM Non-Manufacturing Business Activity Index. A composite diffusion index is created based on the data from these surveys, that monitors economic conditions of the nation.
The MSCI World ex USA Index captures large and mid cap representation across 22 of 23 Developed Markets (DM) countries*–excluding the United States. With 1,012 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country
The volatility (beta) of a client’s portfolio may be greater or less than its respective benchmark. It is not possible to invest in these indices.
Index returns include the reinvestment of income and dividends. The returns for these unmanaged indexes do not include any transaction costs, management fees or other costs. It is not possible to make an investment directly in any index.
Morningstar is the largest independent research organization serving more than 5.2 million individual investors, 210,000 Financial Advisors, and 1,700 institutional clients around the world.
For each separate account with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a separate account’s monthly performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of separate accounts in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The Overall Morningstar Rating for a separate account is derived from a weighted average of the performance figures associated with its three-, five- and ten-year Morningstar Rating metrics.
© 2018 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
The PSN universes were created using the information collected through the PSN investment manager questionnaire and use only gross of fee returns. Mutual fund and commingled fund products are not included in the universe. PSN Top Guns investment managers must claim that they are GIPS compliant. Products must have an R-Squared of 0.80 or greater relative to the style benchmark for the ten year period ending December 31, 2017. Moreover, products must have returns greater than the style benchmark for the ten year period ending December 31, 2017 and also Standard Deviation less than the style benchmark for the ten year period ending December 31, 2017 At this point, the top ten performers for the latest 10 year period ending December 31, 2017 become the PSN Top Guns Manager of the Decade. This designation may not be representative of any one client’s experience because the rating reflects an average of all, or a sample of all, the experiences of investors in the strategy. Though the strategy was in the top ten, it was not ranked first in the top ten category for each period. Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. Not every client’s account will have these exact characteristics. The actual characteristics with respect to any particular client account will vary based on a number of factors including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment.
Clark Capital Management Group, Inc. reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. The information provided in this report should not be considered a recommendation to purchase or sell any particular security, sector or industry. There is no assurance that any securities, sectors or industries discussed herein will be included in an account’s portfolio. Asset allocation will vary and the samples shown may not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. It should not be assumed that any of the securities transactions, holdings or sectors discussed were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein.
Clark Capital Management Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Clark Capital’s advisory services and fees can be found in its Form ADV which is available upon request. CCM-671