Why Is JOHIX Doing So Well Year-to-Date?



Performance evaluation of the JOHCM International Select Fund

The JOHCM International Select Fund Class I Shares (JOHIX) has had an excellent 2016 so far. It’s been the best performer among the 12 funds chosen for this review. The past year, though, hasn’t been as good to the fund—it has placed fourth among its peers. 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 the fund’s unparalleled performance so far in 2016.

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Contributions to returns

When a fund’s top invested sector does well, the fund gets a head start. This has been the case with JOHIX. It has differentiated itself by making the materials sector its top choice, and this sector has by far been its highest positive contributor. 

Australia-based Newcrest Mining has dug up a fantastic performance in 2016. Canada-based Franco-Nevada (FNV) has also been an excellent performer among materials stocks. BHP Billiton (BHP) has contributed positively as well. The absence of any major negative contributors has been very beneficial to the sector.

Industrials have helped the fund post a strong performance. Germany’s GEA Group and Spain’s Gamesa Corporación Tecnológica have been the star performers from the sector. Japan’s Fanuc (FANUY) has dragged on the sector a bit, though. Meanwhile, NTT DOCOMO (DCM) and KDDI have done well for the telecommunications services sector, though Orange (ORAN) has chipped away at some of the positive contributions.

Both consumer-focused sectors have been sizable positive contributors as well. While Henkel AG & Company, L’Oréal (LRLCY), and Danone (DANOY) have helped consumer staples, Adidas (ADDYY) and CyberAgent have powered the consumer discretionary sector.

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In terms of detractors, the financials sector has made a substantial negative contribution to the fund’s returns. Italy’s Exor has driven the sector down. Even after the best efforts of Actelion, negative contributions from Allergan (AGN), Grifols (GRFS), and Takeda Pharmaceutical Company (TKPYY) have hurt the healthcare sector.

Investor takeaway

JOHIX has surpassed all of its peers. Its strategy of investing in the materials sector has paid off. It has easily outperformed both ACWX and EFA. 

However, before investing in this fund, investors should know that its portfolio turnover is high and that its portfolio is fairly small, with less than 50 stocks. The fund is offered on a limited basis only.

Let’s now move on to the Virtus Foreign Opportunities Fund Class A (JVIAX).


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