David Herro Market Commentary | 3Q17
September 30, 2017
25th Anniversary of Oakmark International
September 30, 2017, marked the 25th anniversary of the Oakmark International Fund. Proudly, we were able to deliver an average return of 10.4% per year over the life of the Fund. This return is comfortably ahead of the MSCI World ex U.S. Index return of 6.2% and the Lipper International Fund Index of 7.1%. I am deeply grateful for the support and patience granted by our shareholders. Averages are often comprised of extremes and we have experienced some sharp downturns over short periods that were greatly outnumbered by periods of very strong performance. I firmly believe there is a trade-off in managing for short-term return versus long-term return, and am appreciative of our clients’ patience during weak periods.
I am also deeply appreciative of the many who contributed to the success of this Fund. First, to Victor Morgenstern, then Chairman of Harris Associates, and his fellow partners for hiring me in August of 1992, which gave me the opportunity to start the Oakmark International Fund. Even prior to my employment, Victor and I began laying the groundwork to get Oakmark International registered and opened for business as soon as possible. Then came all those who joined me to work as analysts, traders, administrative assistants, fund accountants, etc. All of these people have played an important role in the success of the Oakmark International Fund. My very first hire, Michael Welsh, was perhaps the most important in terms of the success of the Fund. He started a few months after the Fund’s inception. His experience as a former valuation expert at one of the large accounting firms helped bring tighter structure to our valuation process. Before Michael’s retirement, he was the Fund’s first co-manager.
Lastly, it is my belief that investment success is achieved by having a sound philosophy and the discipline (and freedom) to execute this philosophy through all market conditions. For me, the attraction of joining Harris Associates in 1992 was that the firm possessed that very culture. The investment professionals at Harris/Oakmark have received continuous support, whether it be from our Fund Trustees or Natixis, the current owners of our firm, which has permitted us to carry out the execution of our version of value investing.
David G. Herro, CFA
View other commentary and letters from David here.
Oakmark International Fund – Investor Class
Average Annual Total Returns (09/30/17)
Since Inception (09/30/92) 10.40%
Expense Ratio as of 09/30/16 was 1.00%
Past performance is no guarantee of future results. The performance data quoted represents past performance. Current performance may be lower or higher than the performance data quoted. The investment return and principal value vary so that an investor’s shares when redeemed may be worth more or less than the original cost. The To obtain the most recent month-end performance data, view it here.
Past performance is no guarantee of future results. The performance data quoted represents past performance. Current performance may be lower or higher than the performance data quoted. The investment return and principal value vary so that an investor’s shares when redeemed may be worth more or less than the original cost.
The MSCI World ex U.S. Index (Net) is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. This benchmark calculates reinvested dividends net of withholding taxes using Luxembourg tax rates. This index is unmanaged and investors cannot invest directly in this index.
The Lipper International Fund Index reflects the total return of the 30 largest international equity funds. This index is unmanaged and investors cannot invest directly in this index.
The Oakmark International Fund’s portfolio tends to be invested in a relatively small number of stocks. As a result, the appreciation or depreciation of any one security held by the Fund will have a greater impact on the Fund’s net asset value than it would if the Fund invested in a larger number of securities. Although that strategy has the potential to generate attractive returns over time, it also increases the Fund’s volatility.
Investing in foreign securities presents risks that in some ways may be greater than U.S. investments. Those risks include: currency fluctuation; different regulation, accounting standards, trading practices and levels of available information; generally higher transaction costs; and political risks.
The discussion of the Funds’ investments and investment strategy (including current investment themes, the portfolio managers' research and investment process, and portfolio characteristics) represents the Funds’ investments and the views of the portfolio managers and Harris Associates L.P., the Funds' investment adviser, at the time of this letter, and are subject to change without notice.