State Street is one of the world’s largest fund managers. Keppler Asset Management, a leader in analyzing market value, selects good value major markets. State Street then selects good value shares in these markets.
The State Street Global Advantage Funds are only available to non US investors, but all of us can gain insights by studying the portfolio breakdown of these funds. Non US investors can invest in the funds.
US investors can recreate the portfolio by buying the shares in equal proportions.
The current breakdown of invested countries (December 2008) of the State Street Global Advantage Major Market Fund is:
Countries Percent of Portfolio
Top 10 Investments
Name Country Sector
Berkshire Hathaway Inc. US Value Conglomerate
Statoil ASA Norway Oil
Telefonica S.A. Spain Telecommunications
ENI S.p.A. Italy Oil
Delhaize Group Belgian Food Retail
BP p.l.c. Britain Oil
Banco Santander Central Hispano S.A. Spanish Banking
E. ON AG German Electricty
Erste Group Bank AG Austrian Banking
Enel SpA Italy Electricity
All the shares above can be purchased on their local stock exchange or the New York Stock Exchange so both non US and US investors can invest in them via Jyske Bank or Jyske Global Asset Mangement.
You can gain details from:
US investors Thomas Fischer at firstname.lastname@example.org
Non US investors Rene Mathys at email@example.com
By comparing annual performance of the State Global Advantage Major Market Fund (MMHF) to the Morgan Stanley Capital Index Global Stock Index (MSCI) how we can see how the good value approach consistently outperforms the global average…plus volatility has been lower.
State Global Advantage Major Market Fund Performance IN EURO
Year 2003 2004 2005 2006 2007 YTD
MMHF 17.38% 16.74% 27.50% 21.56% 2.08% -40.74%
MSCI 10.74% 6.46% 26.17% 7.40% -1.66% -33.81%
We can also note that value investments tend to drop more during bear markets. This makes sense. Value investors will be buying shares of companies where the price has dropped enough to create extra value. No one can predict when markets will turn. Value investors will tend to buy on the way down…thus making short term performance worse than the norm. Value investing is long term investing. Value investing is the most dependable type of investing but not in the short term.
We can see how a large downturn can turn total per annum results upside down in the shorter term. Though the State Global Advantage Major Market Fund outperformed the MSCI every year, 2003 to 2007, the 2008 downturn created a portfolio that requires five year performance for the fund to outperform the market whole.
State Global Advantage Major Market Fund Total Return Per Year
Time Inception 5 years 3 years 1 year 3 months
MMHV 6.59% 2.26% -8.72% -41.28% -25.35%
MSCI 4.31% -1.06% -10.61% -34.41% -22.52%
We can see this phenomenon even at Berkshire Hathaway, the legendary value fund.
Berkshire Hathaway Performance
Period Actual(%) vs. S&P 500 (%) Rank In Industry Industry Rank
4 Week – 6.15 0.10 62 39
13 Week -10.04 -3.55 51 47
26 Week -11.17 -3.05 56 83
52 Week 6.03 27.52 92 41
YTD -16.14 -3.32 51 91
Rank is a percentile that ranges from 0 to 99, with 99 and shows that Berkshire Hathaway which has been the best value fund have been among the worst in a sector (value conglomerates) that has been under performing the market as a whole.
Please send your questions and comments to me at firstname.lastname@example.org
Be sure to put MC in the subject line so I can give you a priority reply.
Until next message may all your value be good.
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