Why Has HLMNX Done Well in YTD 2016?

David Ashworth - Author

Jun. 27 2016, Updated 9:08 a.m. ET

Performance evaluation of the Harding Loevner International Equity Portfolio

Given its peer group, the Harding Loevner International Equity Portfolio – Investor Class (HLMNX) has posted excellent performance. For all the periods shown in the graph below, the fund has figured among the top three funds. For the YTD period, it is the second-best performer.

We have graphed its performance against two ETFs: the iShares MSCI ACWI Ex-US ETF (ACWX) and the Vanguard FTSE All-World Ex-US ETF (VEU).

Let’s look at what has contributed to this superior performance by the fund in YTD 2016.

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Portfolio composition and contribution to returns

Compared to its peers, the relatively high exposure to energy stocks has benefited HLMNX in 2016 so far. Schlumberger (SLB) and Royal Dutch Shell (RDS.B) have been the main drivers of the energy sector.

Industrials have helped the HLMNX as well. Japan’s Park24 and Misumi, as well as Canadian National Railway (CNI), among others, have contributed positively in YTD 2016. However, Fanuc Corporation (FANUY) has been instrumental in capping the positive contribution from other stocks.

Although L’Oreal SA (LRLCY) and Bunge Limited (BG) have pulled the consumer staples in opposite directions, LRLCY and other positive contributors have ended up making staples a positive contributor.

Although Allianz SE and ICICI Bank (IBN) have ensured that financials drag on HLMNX, Itaú Unibanco Holding S.A. (ITUB) has helped claw back a lot of the negative contribution from the sector.

Investor takeaway

HLMNX is invested in just 50 holdings, making it comparatively concentrated given its peer group. However, the fund has done well across periods. This is a testimony to the excellent stock picking ability of its fund managers. Another positive aspect of the fund is its low portfolio turnover, showing the fund managers’ propensity to stick to their stock picks.

The passively managed ACWX has been no match for the HLMNX so far in 2016. This shows that a good actively managed fund has the ability to outdo passively managed funds even in difficult times. It’s reasonable to say that HLMNX is one of those funds.

Let’s now move on to the Ivy Global Growth Fund – Class A (IVINX).


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