4 / 5 Stars
5 5 2 2 3
Zacks Investment Research
1 (Strong Buy)
Standard & Poor's
5 / 5 Stars
U.S. News evaluated 200 Foreign Large Blend Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
Note: Profile written for different share class.
The fund has returned 29.04 percent over the past year, 8.87 percent over the past three years, 13.26 percent over the past five years, and 10.57 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||8.4%|
|3 Years (Annualized)||8.9%|
|5 Years (Annualized)||13.3%|
|10 Years (Annualized)||10.6%|
The Ivy International Core Equity fund invests in a broad range of developed market corporations’ stock, without a single U.S. company in the mix. The fund’s relatively high turnover rate might interest investors worried about managers holding onto securities long past a good selling point. This fund invests with the near-term market conditions in mind.
As of July 03, 2014, the fund has assets totaling almost $2.29 billion invested in 89 different holdings. Its portfolio consists of large, non-U.S. company stocks, most of which reside in developed economies.
Although it’s considered a foreign large-cap value fund—meaning that its largest asset class is large companies with relatively lower growth than the market as a whole—Ivy International Core Equity is diversified between more expensive, high-growth stocks and cheaper, low-growth stocks. As such, it’s really more of a diversified large-cap fund. That said, based on whichever price ratios you wish to use—price to sales, price to earnings, price to cash flow, etc.—it’s clear that the fund seeks lower-valued stocks than its peers. This may be a sign that the quality of a company is somewhat less important to management than its relative cheapness, as compared with similar large-cap, value-oriented funds. For instance, in the third quarter of 2010, the fund added Credit Suisse Group, which was down by as much as 25 percent since December 2009, to its portfolio.
Because the fund has gone through quite a few management changes in its 13-year existence, it’s tough to say if its strategy has remained consistent. Certain factors remain consistent, though. The fund holds securities for an average of about one year, which reveals management’s focus on making regular portfolio corrections with a short-term outlook. “The market’s very fickle, and price appreciation happens pretty quickly. In three months, my outlook for the market might be very different just given the dynamics and government involvement,” says portfolio manager John Maxwell. The fund has returned 29.04 percent over the past year and 8.87 percent over the past three years.
Worth noting is the fund’s higher-than-average dividend yield, which stands at 4 percent. A high yield is one of many factors that has helped the fund remain in the top third of its category based on its return in each of the past five years. Maxwell believes his strength is in using the same prominent themes that other investment managers are using, but playing those themes with different securities than the majority. The fund has returned 13.26 percent over the past five years and 10.57 percent over the past decade.
According to its prospectus, the fund “invests, under normal market conditions, at least 80 percent of its assets in equity securities principally traded in largely developed European and Asian/Pacific Basin markets.” Management says it balances its selection process between top-down country and industry analysis (which means focusing on market growth before individual company growth) with bottom-up, individual stock analysis. But because of its focus on stocks with exposure to global investment themes and its care in observing nations’ political stability, the fund’s strategy is best viewed best as top-down.
Role in Portfolio
This fund could lend support to a well-balanced portfolio.
The fund, which launched in 1997, has not had steady management. Excluding Thomas Mengel, who lead the fund for six years, the fund’s other four past and present portfolio managers have averaged 2.5 years apiece at the helm. Since Mengel left in 2009, John Maxwell has taken over full operational duties of the fund. “We’re a hub-and-spokes management style, where the analysts work for everybody,” Maxwell says. “We do have eight dedicated international analysts that support me, but they also work for two other similar funds.”
Ivy International Core Equity Fund has an expense ratio of 1.04 percent.
This fund’s higher turnover rate leads to larger transaction costs, which are passed onto investors. The fund’s expense ratio isn’t the most competitive.