Performance evaluation of the AB International Growth Fund
The AB International Growth Fund – Class A (AWPAX) has been the best performer among the 12 funds in this review in the past one and three months ended June 17, 2016.
However, in the YTD period that we’ll be analyzing, the fund has declined by 3.6% and stands fifth among its peers. 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 fund’s performance in YTD 2016.
Portfolio composition and contribution to returns
Financials have been the biggest negative contributors to the total return of AWPAX in YTD 2016 until June 17. Prudential (PUK), UBS Group (UBS), and Credicorp (BAP) have emerged as the top three negative contributors. BAP is not a part of the portfolio anymore. Partners Group Holding has been instrumental in reducing the drag from the sector.
The consumer discretionary sector follows financials in terms of negative contribution to returns. China’s JD.com (JD) and Japan’s Fast Retailing have led the sector down, along with stocks like Nissan Motor Co. (NSANY) and Panasonic (PCRFY). Indonesia’s Matahari Department Store and China’s TAL Education Group (XRS) have helped in capping the negative contribution.
While discretionary stocks have contributed negatively, staples have been positive contributors, primarily led up by Japanese drugstore chain Tsuruha Holdings.
Information technology stocks such as Taiwan Semiconductor Manufacturing (TSM) have helped the sector contribute positively in 2016 so far.
Fund management of AWPAX seems to be positioning itself defensively. Exposure to financials and discretionary stocks has been reduced, while exposure to staples and utilities has been increased.
Also, fund managers have not yet decided to reintroduce energy stocks to the portfolio. However, they’ve balanced this position to some degree by increasing exposure to industrials and information technology stocks.
For now, the fund is underperforming the passively managed ACWX. However, the fund has done considerably better than ACWX in the one-year period ended June 17, 2016. Its portfolio turnover remains low for now, but it needs to be seen whether further stock level changes are in the offing.
Let’s now move on to the Calamos International Growth Fund – Class A (CIGRX).