Oakmark International Fund: Second Quarter 2013

Oakmark is the mutual fund family launched in 1991 by Harris Associates, the Chicago deep-value firm founded in 1976 (about $105bn AUM). Bill Nygren runs the flagship Oakmark Fund and David Herro the Oakmark International Fund, buying businesses at large discounts to intrinsic value and holding them like owners — publishing quarterly fund commentaries, market commentaries and insight articles.

Bill Nygren、David Herro · 1991 · 美国芝加哥Deep value / contrarian long-term

Theme and Background

This section focuses on the performance of the Oakmark International Fund (Investor Class) as of June 30, 2013, showcasing the fund’s long-term return capability since its inception in 1992 and disclosing its fee structure. The market environment is in the post-global financial crisis recovery period, with international equities overall performing strongly.

Core Thesis

The report’s core investment argument is that the fund has achieved robust long-term excess returns through its stock selection strategy, particularly outstanding in the 1-year period (34.59%), validating the effectiveness of its value investing approach. The counterintuitive point is that while both the 5-year and 10-year returns exceed 9%, the 1-year return far surpasses the long-term average, indicating that the fund captured structural opportunities amid recent market volatility.

Key Arguments and Data

Long-Term Returns: Since inception on September 30, 1992, the average annual total return is 10.59%, with 10-year at 11.08% and 5-year at 9.92%, all significantly above comparable international benchmark indices (e.g., MSCI EAFE) over the same periods.
Short-Term Surge: The 1-year return reached 34.59%, and the 3-month return was 3.76%, suggesting that the recent stock selection strategy performed exceptionally well during the rebound.
Cost Control: The total expense ratio (as of September 30, 2012) is 1.06%, lower than the average for similar international funds (approximately 1.3%-1.5%), reducing the erosion of returns by costs.

Time Period	Average Annual Total Return
Since Inception (09/30/1992)	10.59%
10-Year	11.08%
5-Year	9.92%
1-Year	34.59%
3-Month	3.76%

Companies/Assets Involved

Oakmark International Fund: The target fund analyzed in the report, employing a value investing strategy and investing in non-U.S. market equities. Key data: 1-year return of 34.59%, expense ratio of 1.06%. The report holds a bullish stance, believing its long-term performance validates the strategy’s effectiveness.

Investment Implications

Directional Suggestion: Investors may consider allocating to this fund for international equity exposure, given its stable long-term returns and low fees. The high 1-year return suggests that the value strategy may still have room in the current market environment, but short-term volatility risks should be noted.
Risk Warning: The 1-year return of 34.59% is not sustainable; investors should focus on the long-term average (approximately 10%-11%) rather than short-term surges. Although the expense ratio of 1.06% is low, it requires ongoing monitoring for potential increases as assets under management grow.