How Has 2016 Treated HLMNX So Far?


Mar. 11 2016, Updated 8:07 a.m. ET

Harding Loevner International Equity Portfolio’s performance

In this article, we’ll specifically outline the performance of the Harding Loevner International Equity Portfolio – Investor Class (HLMNX), which is the class available for retail investors. The fund is invested in stocks of companies like ICICI Bank (IBN), Imperial Oil (IMO), Itaú Unibanco Holding (ITUB), L’Oréal (LRLCY), and LVMH Moët Hennessy Louis Vuitton (LVMUY), among others.

From a purely NAV (net asset value) return standpoint, the HLMNX was a below-average performer for both the one-year period until February 29, 2016, as well as in 2015 among the peers chosen for this series. For return comparison, we have chosen two ETFs: the iShares MSCI ACWI ex U.S. ETF (ACWX) and the Vanguard FTSE All-World ex-US ETF (VEU). For evaluating benchmark-related metrics, we’ve chosen ACWX as the benchmark for all funds in this review, as it tracks the MSCI All Country World ex-U.S. Index.

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Other metrics

The HLMNX’s standard deviation, or the volatility of returns, in the one-year period until February 29 was 15.2%. This is lower than both the ACWX’s 15.4% and the peer group’s average of 15.7%.

The fund’s risk-adjusted returns, calculated via the Sharpe Ratio, were negative for the one-year period ended February 29. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that. The ratio stood at 0.08 for 2015, placing it tenth among its peers.

The information ratio, calculated with ACWX as the benchmark, was 1.36 for the one-year period ended February 29, placing it fourth among its peers. The information ratio shows the consistency of fund managers and their ability to generate excess returns over a benchmark. The higher the reading, the better the consistency. For 2015, the fund’s information ratio put it in sixth place among its peers.

A note to investors

HLMNX has been an above-average alpha generator in the one-year period ended February 29, ranking it fifth among 12 funds in this review. However, in 2015, its alpha ranked it second to last among its peers. YTD 2016 has been much better for the fund, as its alpha is the third best among its peers. The fund’s comparably lower volatility is an asset as well. Whether it should make your shortlist should depend on a longer assessment of its performance apart from whether its investment strategy suits you.


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