Why Has 2016 Been Lackluster for OIGAX?


Sep. 7 2016, Updated 7:04 p.m. ET

Performance evaluation of the Oppenheimer International Growth Fund

The Oppenheimer International Growth Fund Class A (OIGAX) has been having a subpar 2016 so far. It stands eighth among the 12 funds chosen for this review.

The past six months have been bad for the fund. Only for the one-year period does it figure among the above average performers. We’ve graphed its performance against the iShares MSCI ACWI ex U.S. ETF (ACWX) and the iShares MSCI EAFE ETF (EFA). Let’s look at what’s contributed to its below average performance so far in 2016.

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Contributions to returns

Industrials, the fund’s second most invested sector, have emerged as the biggest contributor to its returns in 2016 as of August’s end. Spanish company Prosegur Compañía de Seguridad has led the industrials sector with help from Edenred and Rolls Royce Holdings (RYCEY), among others. However, airline manufacturers such as Embraer (ERJ) and Airbus Group (EADSY) have reduced these positive contributions to some degree.

The consumer staples sector has also been a major positive contributor to OIGAX. Thailand-based CP ALL Public Company has powered the sector with help from Danone (DANOY) and others. Meanwhile, ARM Holdings (ARMH) has helped the information technology sector up with able support from ASML Holding (ASML) and SAP (SAP).

However, the sector’s positive contributions have been muted by several negative contributors such as Lenovo Group (LNVGY), Ericsson (ERIC), and Nokia (NOK).

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Moving on to the detractors, the fund’s stock picks from the telecommunications services sector haven’t worked for it at all. The sector has surprisingly been OIGAX’s biggest negative contributor, even though it forms just 6% of its assets. UK-based Inmarsat has hammered the sector down, closely followed by BT Group (BT).

Though Nippon Telegraph and Telephone Corporation (NTT) has contributed positively, its contribution has paled in the face of negative contributions from other stocks.

The financials, healthcare, and consumer discretionary sectors are the other sectors that have contributed negatively to OIGAX’s returns. While UBS Group (UBS) and Prudential (PUK) have driven financials down, Grifols (GRFS) and Novo Nordisk (NVO), among others, have been the underperformers in the healthcare sector.

Investor takeaway

OIGAX’s stock picks haven’t worked well in 2016 so far. Even when sectors have contributed positively, negative contributors have checked their returns.

However, the fund’s management has stuck with its holdings choices, which can be seen in its low portfolio turnover. This conviction, backed by a strong past performance, should be enough to convince existing investors to stick with the fund. For prospective investors, the fund could be a good starting point for investing in international funds.

Let’s now move on to the T. Rowe Price International Stock Fund (PRITX).


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