TGVAX: What Hurt Its Performance Most in January 2016?

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The Thornburg International Value Fund’s composition

The Thornburg International Value Fund – Class A (TGVAX) has been in existence since May 1998. At the end of January 2016, the fund was managing assets worth $8.6 billion and these were spread across 54 holdings at the end of January.

Financials formed 18.6% of the fund’s assets and made up the largest sector of investment as of the end of January. The consumer discretionary and industrial sectors followed, forming a combined 28.7% of the portfolio. The top three geographies invested in—the United Kingdom, Japan, and France, in that order—formed 46.5% of the fund’s assets.

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Japan’s Nippon Telegraph and Telephone (NTT) was the fund’s largest holding in December 2015, forming 3.9% of the assets. The largest holding from Italy is Telecom Italia (TI), forming 2.6% of the portfolio. France is represented by Saint-Gobain (CODYY) and Vinci. Other holdings include CME Group (CME) and Kansas City Southern (KSU).

Returns of the Thornburg International Value Fund

The Class A shares of Thornburg International Value Fund (TGVAX) did well in terms of gaining in 2015 and capping the decline in the one-year period ended January 2016. From a purely NAV (net asset value) return standpoint, the TGVAX stood first and second, respectively, in the aforementioned periods, among the nine funds in this review.

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Standard deviation

Standard deviation is used for assessing risks associated with an investment. Simply put, it measures the deviation of a series of returns from the average. A wide deviation reflects a high fluctuation in the returns, resulting in a higher risk, and vice versa.

For the one-year period ended January 2016, the standard deviation for the TGVAX stood at 15.8%. Meanwhile, the arithmetic average of the standard deviation of all funds in this review was 14.5%. Excluding the TGVAX, the average was 14.3%. The volatility of returns of the fund was the highest among the funds’ volatilities in this review and drove up the average of the peer group.

Sharpe ratio

For realized returns, the Sharpe ratio assesses the average return on a risk-free asset or security over total risk as represented by a standard deviation. The higher the Sharpe ratio, the better the risk-adjusted performance. The Sharpe ratio for the TGVAX for the one-year period ended January 2016 stood at -0.18, while it had stood at 0.50 in 2015.

A note for investors

The TGVAX was among the worst hit amid the falling markets of January 2016. Its risk-adjusted performance was hurt because of that volatility. Its standard deviation was quite high in 2015 as well, but the performance of its holdings more than made up for it. Its concentrated portfolio is one of the reasons for the high volatility. Investors interested in the fund need to keep in mind that if 2016 remains volatile, the fund’s performance may be hurt. Let’s move to the last fund in this review: the Vanguard International Growth Fund – Investor Shares (VWIGX).

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