Why Has the Nuveen International Growth Fund Stumbled in YTD 2016?

David Ashworth - Author

Jun. 27 2016, Updated 10:06 a.m. ET

Performance evaluation of the Nuveen International Growth Fund

For all the periods until June 17 shown in the graph, the Nuveen International Growth Fund – Class A (NBQAX) has figured among the bottom three funds in its peer group of 12 funds.

For the YTD 2016 period, this fund stands dead last. 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 the fund’s poor performance in YTD 2016.

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Portfolio composition and contribution to returns

The information technology sector has contributed the most to the fund’s poor showing in YTD 2016. Financials are the second-largest negative contributors to NBQAX’s returns.

China’s Ping An Insurance and Japan’s Mizuho Financial Group (MFG) have led the detractors in this sector. Healthcare tails financials and is led down by Belgium-based Galapagos NV (GLPG).

Other negative contributors from the sector include Teva Pharmaceutical Industries (TEVA), Novo Nordisk A/S (NVO), and Shire (SHPG). Although Adidas (ADDYY) has reduced some drag from the consumer discretionary sector, it still has contributed a sizably negative influence in 2016 so far.

Kinross Gold (KGC) and Barrick Gold (ABX), among others, have weighed on the materials sector.

Energy is to be credited for reducing some drag on the overall returns of the fund. Tullow Oil, Statoil ASA (STO), and Total S.A. (TOT) are among the major positive contributors.

Investor takeaway

NBQAX has had almost nothing going for it this year. Had it not been for positive contributions from the energy and consumer staples sectors, the fund would have done even worse.

A vital aspect to note is its high turnover. Although a high portfolio turnover is not necessarily a bad thing if it is backed up by superior performance, this does not seem to be the case for NBQAX. There is no performance to speak of, which leads us to believe that there is little thought behind the high amount of portfolio change. Investors should take note of this fact before investing.

Let’s now move on to the Scout International Fund (UMBWX).


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