Harding Loevner International Equity Portfolio overview
The Harding Loevner International Equity Portfolio (HLMNX) invests in developed markets except the US, as well as in established companies from emerging and frontier markets. The fund’s literature states that the fund normally invests in at least 15 countries.
The fund’s co-lead managers each create a sub-model portfolio for the International Equity strategy, which is combined to create a single model portfolio. Bottom-up stock selection drives the sector and country allocation.
In order to keep the volatility of the portfolio in check, the fund notes that its assets are spread across “dimensions of geography, industry, currency and market capitalization.” Under normal circumstances, fund managers will not invest more than 15% of the fund’s assets in US stocks.
The fund’s assets were spread across 50 holdings in March 2016, and it was managing $5.8 billion in assets. In March, its equity holdings included Imperial Oil (IMO), Baidu, (BIDU), Canadian National Railway (CNI), Fresenius Medical Care (FMS), and Grifols, S.A. (GRFS).
Portfolio changes in the Harding Loevner International Equity Portfolio
Information technology stocks are the single-largest sectoral constituents of the Harding Loevner International Equity Portfolio (HLMNX), forming nearly one-fifth of the portfolio pie. Healthcare and industrials round off the top three invested sectors. These three sectors combined half of the fund’s portfolio. The fund is not invested in the utilities sector.
Compared to the MSCI All Country World Ex-US Index, the fund is markedly overweight in the information technology and healthcare sectors. The fund is a bit overweight in the consumer staples and industrials sectors.
On the other hand, the fund is sharply underweight in the financial, consumer discretionary, and telecom services sectors. Europe is the most invested geography, followed by Japan and emerging markets, in that order.
In the past 12 months until May 2016, HLMNX has made a few significant changes to its portfolio. Exposure to financials has come down sharply. A year ago, the sector was the largest invested one. However, it currently stands in fifth place. Meanwhile, exposure to information technology stocks has been stepped up in this period.
How has the Harding Loevner International Equity Portfolio – Investor Class (HLMNX) fared in YTD 2016? Let’s discover that in the next article.