Quick Take: The Ivy Cundill Global Value Fund (ICDVX) adheres to the classic deep value investment philosophy of Graham and Dodd, selecting stocks with strong balance sheets, but trading at a significant discounts to historical averages and industry peers.
For the one-year period through Oct. 30, 2004, the $275-million fund gained 17.5%, outperforming its benchmark, the MSCI World Index, which rose 13.3%. For the three-year period, the find returned 12.1% annualized, versus 6.1% for the index, and 6% for its peers.
As an added bonus, the fund exhibits lower volatility relative to its peer group, as well as low annual turnover. Expenses, however, run higher at 2.12%, versus 1.69% for the average global stock fund. The portfolio is also concentrated, and can assume high weightings in individual countries, which can court country-specific risks.
While portfolio manager Peter Cundill resides in London, his company and the fund’s subadvisor, Peter Cundill & Associates Inc. are based in Vancouver, Canada. The firm manages about $5 billion in total assets, mostly in Canadian mutual funds.
Cundill is assisted on the portfolio by co-manager Hhu Ng.
The Full Interview:
S&P: What is the investment philosophy behind this fund?
CUNDILL: We look for undervalued stocks anywhere in the world of any market-cap size by using the classic deep-value investing styles of Graham-Dodd. We purchased stocks we believe to be trading below their intrinsic values, or below their liquidation values, and that have strong balance sheets.
Our strategy is strictly bottom-up, and we favor keeping a concentrated portfolio of stocks that we have high conviction in. As a result, we don’t buy and trade much. Our annual turnover rate is only about 10%.
S&P: What are your top sectors?
CUNDILL: As of Sept. 30, 2004: financials, 35.1%; consumer staples, 24.4%; consumer discretionary, 24.1%; industrials, 5.3%; and information technology, 3.4%.
S&P: What are your top country allocations?
CUNDILL: As of Oct. 29, 2004: Japan, 37.2%; U.S., 7.2%; Hong Kong, 7.0%; Canada, 3.9%; Malaysia, 3.3%; South Korea, 3.1%; Germany, 2.2%; Italy, 2.2%; and Singapore, 2.1%. We currently have a 33.2% cash stake.
S&P: Why do you have such an large cash position?
CUNDILL: This fund has more than quintupled in size since the end of last year, from about $51 million to $275 million now, due to inflows and price appreciation. As a result, we need cash reserves to keep some flexibility, and we are cautious about the markets. We are simply not finding a lot of bargains out there. In the past, we have had a cash stake as high as 40%.
S&P: Why such a large presence in Japan?