Oakmark International Fund: Third Quarter 2019

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 as of September 30, 2019, analyzing the significant divergence between its short-term and long-term returns. In terms of market environment, global trade tensions and concerns over slowing economic growth have led to increased volatility in international stock markets, putting pressure on the fund's recent returns.

Core Thesis

The report's central investment argument is that, despite the fund's negative short-term (1-year) returns, its long-term annualized return since inception (1992) remains at 9.06%, indicating that short-term fluctuations are driven by market sentiment rather than fundamental deterioration. The author believes that value investing strategies are effective over the long term, and investors should ignore short-term noise and remain patient.

Key Arguments and Data

Long-term vs. Short-term Performance Comparison: Since its inception in 1992, the fund's annualized return is 9.06%, but the 1-year return is -6.41%, and the 3-month return is -0.78%. This contrast suggests that the short-term market has overreacted to trade and growth concerns.
Mid-term Returns Are Also Weak: The 5-year return is only 2.80%, and the 10-year return is 6.63%, indicating that performance over the past five years has significantly lagged behind the long-term average.
Low Expense Ratio: The net expense ratio is 0.96%, lower than the average for similar funds, which benefits long-term compounding.

Time Horizon	Annualized Return
Since Inception (September 30, 1992)	9.06%
10-Year	6.63%
5-Year	2.80%
1-Year	-6.41%
3-Month	-0.78%

Companies/Assets Involved

This section does not mention specific companies or assets; it only analyzes the fund's overall performance. The fund's holdings are concentrated in undervalued high-quality international companies, but the report does not disclose specific targets.

Investment Insights

Short-term Volatility as a Buying Opportunity: The fund's 1-year return is negative, but its strong long-term historical performance suggests that current valuations may be undervalued, making it suitable for value investors to accumulate positions during downturns.
Maintain a Long-term Perspective: The 5-year return is only 2.80%, significantly lower than the 10-year return (6.63%) and the return since inception (9.06%), indicating that market style has been unfavorable to value strategies in recent years. However, the historical pattern of mean reversion supports continued holding.
Cost Advantage: The net expense ratio of 0.96% is below the industry average, which can save costs over the long term and enhance the compounding effect.