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.
This report covers the Oakmark International Fund's performance through late 2019. The key takeaway: since its 1992 launch, it has averaged 9.40% annual returns, outperforming its 5- and 10-year averages. While 2019 saw a big 24.21% gain, the report warns not to focus on short-term spikes. It also highlights how fees (net expense ratio 0.98%) eat into returns over time. For regular investors, the lesson is to pick low-cost funds and stick with them for the long haul, rather than chasing one-year winners. Worth a read for a clear example of long-term compounding.
Oakmark International Fund (Investor Class) performance data as of December 31, 2019 shows an annualized return of 9.40% since inception on September 30, 1992, with returns of 7.30%, 5.07%, 24.21%, and 11.07% over the past 10 years, 5 years, 1 year, and 3 months, respectively. The fund's gross expen
This section focuses on the performance and fee structure of the Oakmark International Fund (Investor Class) as of December 31, 2019. By presenting long-term and short-term return data, the report aims to validate the effectiveness of its value investing strategy and reminds investors to consider the impact of fees on net returns.
The report’s central investment argument is that the Oakmark International Fund, through a long-term value investing strategy, has achieved annualized returns significantly exceeding market averages over nearly 30 years since its inception in 1992. The counterintuitive insight is that, despite a high short-term return of 24.21% in 2019, the report emphasizes that the long-term compounding effect (9.40% annualized since inception) is the true measure of strategy success, not single-year performance.
The report supports its thesis with specific return data, highlighting the contrast between long-term and short-term performance, as well as the erosion of net returns by fees. Key data are as follows:
| Time Period | Average Annual Total Return (as of December 31, 2019) |
|---|---|
| Since Inception (September 30, 1992) | 9.40% |
| 10 Years | 7.30% |
| 5 Years | 5.07% |
| 1 Year | 24.21% |
| 3 Months | 11.07% |
Regarding fees:
The report implicitly contrasts that the long-term annualized return (9.40%) is significantly higher than the short-term 5-year (5.07%) and 10-year (7.30%) returns, indicating stronger compounding effects from early investments. While the 1-year return (24.21%) is high, it is not sustainable, and actual gains must be calculated after accounting for fees (net expense ratio of 0.98%).
For investors, the implication is that priority should be given to long-term compounding returns (e.g., 9.40% annualized since inception) rather than short-term volatile gains (e.g., 24.21% in one year). Additionally, investors must be wary of the erosion of net returns by fees—while the net expense ratio of 0.98% is lower than the gross expense ratio of 1.03%, its cumulative effect over the long term can significantly reduce actual returns. The report recommends choosing low-fee funds and adhering to long-term holding to maximize compounding effects.