Oakmark International Fund: Third Quarter 2021

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 provides performance data and fee structure for the Oakmark International Fund (Investor Class) as of September 30, 2021. The report aims to demonstrate the fund's long-term performance since its inception in 1992 and explain the impact of the current fee arrangement on investors' actual costs.

Core Thesis

The author's core investment argument is that, despite a negative return of -5.02% in the most recent quarter (3 months), the fund's long-term annualized returns (9.28% since inception, 9.02% over 10 years, and 8.27% over 5 years) remain robust, indicating the effectiveness of the value investing strategy over the long term. The counterintuitive judgment is that short-term volatility (negative 3-month return) should not obscure the value of long-term compounding growth, and the expense ratio is lower than the nominal level due to contractual waiver agreements.

Key Arguments and Data

Robust Long-Term Performance: Since its inception in September 1992, the fund has achieved an annualized return of 9.28%, with positive returns over the past 10 years (9.02%) and 5 years (8.27%).
Significant Short-Term Volatility: The 1-year return is as high as 41.96%, but the 3-month return is -5.02%, indicating a short-term market pullback.
Optimized Fee Structure: The Gross Expense Ratio is 1.06%, but the Net Expense Ratio is 1.04% due to a contractual advisory fee waiver agreement (valid until January 27, 2022), meaning actual costs may be lower.

Metric	Value
Annualized Return Since Inception (since September 30, 1992)	9.28%
10-Year Annualized Return	9.02%
5-Year Annualized Return	8.27%
1-Year Return	41.96%
3-Month Return	-5.02%
Gross Expense Ratio	1.06%
Net Expense Ratio	1.04%

Companies/Assets Involved

Oakmark International Fund (Investor Class): The core fund analyzed in the report. Key data: annualized return of 9.28% since inception, 1-year return of 41.96%, and 3-month return of -5.02%. The author holds a bullish view on this fund, emphasizing the effectiveness of its long-term value investing strategy.

Investment Insights

Long-Term Holding Outperforms Short-Term Timing: Short-term (3-month) negative returns (-5.02%) should not disrupt long-term investment decisions. The fund's nearly 30-year annualized return of 9.28% since inception demonstrates the value of compounding.
Focus on Actual Fees: Investors should pay attention to the Net Expense Ratio (1.04%) rather than the Gross Expense Ratio (1.06%), as the waiver agreement reduces costs. However, note that fees may rise after the agreement expires on January 27, 2022.
Maintain Discipline Amid Volatility: The pullback following a high 1-year return (41.96%) highlights market volatility, but historical data supports the value strategy outperforming over the long term.