Oakmark International Fund: Second Quarter 2020

Theme and Background

This section presents the performance and fee structure of the Oakmark International Fund (Investor Class) as of June 30, 2020. The report aims to display the fund's returns across different time horizons, providing a data foundation for investors to evaluate its long-term and short-term performance.

Core Viewpoint

The report's implicit core judgment is that the fund has demonstrated solid long-term performance (annualized return of 8.20% since inception in 1992), but has been significantly dragged down by short-term market volatility (a loss of 15.15% over the past year), with a strong recent rebound (a return of 24.42% over the past three months). The counterintuitive point is that despite negative returns over the past five years (-1.31%), the long-term annualized return remains positive, indicating that short-term fluctuations have not undermined long-term value accumulation.

Key Arguments and Data

• Long-term Performance: Since inception in September 1992, the annualized return is 8.20%, demonstrating the long-term compounding effect.
• Medium-term Performance: The return over the past 10 years is 5.14%, below the long-term average, reflecting challenging market conditions in the recent decade.
• Short-term Performance: The return over the past five years is -1.31%, and over the past year is -15.15%, indicating severe recent market declines.
• Recent Rebound: The return over the past three months is 24.42%, showing a significant market recovery in the second quarter of 2020.
• Fee Structure: The gross expense ratio is 1.03%, and the net expense ratio is 0.98%, which is moderately low among actively managed funds.

Companies/Assets Involved

• Oakmark International Fund (Investor Class): The core fund analyzed in the report, with no specific holdings mentioned. The fund serves as the investment vehicle, and the report does not explicitly take a bullish or bearish stance but implies its long-term value through performance data.

Investment Insights

• Long-term Investors: The fund's long-term annualized return of 8.20% makes it suitable for holding periods exceeding 10 years, and short-term volatility should not disrupt long-term strategies.
• Short-term Investors: The loss of 15.15% over the past year indicates high short-term risk, requiring caution during market downturns.
• Fee Considerations: The net expense ratio of 0.98% is below the industry average (approximately 1.2%), resulting in less erosion of long-term returns and making it a priority consideration.
• Rebound Signal: The 24.42% rebound over the past three months may suggest that the market bottom has passed, but its sustainability should be assessed in conjunction with the macroeconomic environment.