Value Equity Management
Global Value Equity
Our Global Value Equity strategy draws on our expertise and strength in firsthand, fundamental research and our patient approach to individual security selection. Common to all of our equity strategies is the pursuit of inefficiencies in the valuation of securities that we can exploit through adherence to a value-oriented, bottom-up investment process. Our global value equity portfolios reflect value characteristics such as 1) price/earnings ratios below the market (MSCI All Country World Index), 2) price/book ratios below the market, 3) enterprise value/free cash flow ratios below the market, and 4) dividend yields above the market.
|Asset Class||Global Equity|
|Portfolio Benchmark:||MSCI World Index|
Our approach to the equity market is based on the underlying philosophy that markets are inefficient. We believe that these inefficiencies can best be exploited through adherence to a value-oriented investment process dedicated to the selection of securities on a bottom-up basis. We do not attempt to time the market or rotate in and out of broad market sectors, as we believe that it is difficult, if not impossible, to add incremental value on a consistent basis by market timing.
We stay fully invested with a defensive, conservative orientation, based on the belief that superior returns can be achieved while taking below-average risks. We implement this strategy by constructing portfolios of individual stocks that reflect value characteristics such as: 1) price/earnings ratios below the market (MSCI All Country World Index), 2) price/book ratios below the market, 3) enterprise value/free cash flow ratios below the market, and 4) dividend yields above the market. Barrow Hanley's history of value investing indicates that a strategy of emphasizing low price/earnings ratios, low price/book ratios, and high dividend yields provides a measure of protection in down markets, as well as participation in improving economic cycles.
The equity research process at Barrow Hanley is conducted on a bottom-up basis by our experienced analysts and portfolio managers. Our team focuses primarily on fundamental securities analysis, valuation, and prospects for a return to fair valuation.
In our portfolio construction process, we do not attempt to implement macro bets from a top-down perspective. While we adhere to internal guidelines to ensure proper diversification, industry and sector weightings are a residual of the bottom-up stock selection process and may vary meaningfully at times from the respective weightings in the MSCI All Country World Index.
We construct portfolios with both dollar and non-dollar currency exposure (i.e., unhedged) in a fully invested manner. While the Global Value Equity strategy is primarily invested in companies domiciled in developed markets, the strategy may invest up to 20% of the portfolio in companies domiciled in emerging markets, as defined by MSCI.
Portfolio Characteristics as of 12/31/2019
|P/E Ratio (Forecasted 12 Months)||15.4||16.9|
|Weighted Average Market Cap ($M)||67707||178229|
|Median Market Cap ($M)||43882||11100|
|Regional Allocations as of 12/31/2019|
|Europe ex UK||23.3%|
|Top Holdings as of 12/31/2019|
|Berkshire Hathaway Inc. Class B||3.2%|
|Comcast Corporation Class A||2.8%|
|Air Liquide SA||2.8%|
|Munich Reinsurance Company||2.8%|
|General Electric Company||2.8%|
|National Grid plc||2.7%|
|Advance Auto Parts, Inc.||2.6%|
|Wells Fargo & Company||2.5%|
|Sector Weightings as of 12/31/2019|
|Performance as of 12/31/2019|
|Annualized Portfolio Returns (%)|
*3 Month returns are not annualized.
**Inception Date: 9/1/2010
Barrow Hanley's returns are shown before investment management fees and custody expenses. Index returns do not reflect transaction costs, management fees, and other expenses. Performance is expressed in U.S. currency. Net-of-fee returns are calculated using a model fee. The model fee is based on a $100 million portfolio using our standard fee schedule. Holdings and statistics are presented as supplemental information to the BHMS Global Value composite. A full disclosure presentation may be accessed from the link above. Barrow, Hanley, Mewhinney & Strauss, LLC claims compliance with the Global Investment Performance Standards (GIPS®).
The MSCI Inc. ('MSCI') information may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an 'as is' basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the 'MSCI Parties') expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages.
All institutional product information has been provided by Barrow, Hanley, Mewhinney & Strauss, LLC. Any questions about this material or requests for additional information may be made directly to the firm from the "Contact Us" link above.