David Herro Market Commentary | 3Q17

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 presents the performance data of the Oakmark International Fund (Investor Class) as of September 30, 2017, serving as empirical evidence for the effectiveness of the fund's long-term value investment strategy. By comparing returns across different time horizons, the report demonstrates the fund's ability to generate gains over both short and long periods.

Core Thesis

The report's core thesis is that the Oakmark International Fund achieves sustained excess returns by holding undervalued international companies over the long term. Since its inception in September 1992, the fund has delivered an annualized return of 10.40%, significantly outperforming the market average, thereby validating the effectiveness of the value investment strategy in international markets.

Key Arguments and Data

The report provides the fund's average annualized total returns across various time periods in a table, clearly illustrating its performance:

Time Horizon	Return
Since Inception (September 1992)	10.40%
Past 10 Years	6.18%
Past 5 Years	12.87%
Past 1 Year	34.88%
Past 3 Months	9.10%

Long-Term Performance: An annualized return of 10.40% since inception indicates the strategy has remained effective over a 25-year cycle.
Short-Term Surge: Returns of 34.88% over the past year and 9.10% over the past three months highlight the recent global market recovery and significant stock selection advantages.
Expense Ratio: As of September 30, 2016, the expense ratio stood at 1.00%, which is within a reasonable range for the industry.

Companies/Assets Involved

This section does not mention specific companies or assets, focusing solely on the fund's overall performance data.

Investment Insights

Value Investment Strategy is Effective: The fund's long-term annualized return of 10.40% suggests that persistently holding undervalued international companies can navigate market cycles and generate stable returns for investors.
Short-Term Volatility Does Not Alter Long-Term Logic: Although the one-year return reached 34.88%, the ten-year return was only 6.18%, indicating that short-term fluctuations do not affect long-term value reversion. Investors should focus on long-term holding rather than chasing short-term trends.
Cost Control is Important: An expense ratio of 1.00% is relatively low among actively managed funds, helping to enhance net returns. Investors should prioritize low-cost products when selecting funds.