As investors try to sift through an extended bull market to find nuggets of opportunities, many may want to consider an actively managed strategy with a proven track record, such as the Davis Advisors’ exchange traded funds, to potentially enhance returns.
“We are true, bottom up active advisors,” Danton Goei, Portfolio Manager for Davis Advisors, said on the recent webcast, Searching the Globe for Investment Opportunities.
Goei explained that at Davis Advisors they implement a number of screens to look for certain criteria when selecting a company.
For instance, the management team looks to durability, adaptability and resiliency of a company for strong competitive advantages, superior business models, attractive financials and superior free cash flows. They also select those with proven, capable management with a track record of good decisions, intelligent capital allocators and alignment of interests. Additionally, the team focuses on discount to true value by calculating owner earnings to arrive at the true value of a company.
After a multi-year bull run, U.S. equities are now trading at lofty valuations, so investors may want to consider options outside of this comfort zone.
“In a quest for growth of capital, clients shouldn’t limit their opportunity set,” Goei said. “Many of attractive investment opportunities exist outside of US borders.”
Goei argued that investors are leaving potential opportunities on the table when ignoring international markets and adhering to a U.S.-centric portfolio. There are almost nine times as many companies listed outside the U.S. – 4,331 companies are listed in the U.S., whereas 38,861 exist outside U.S. borders.