Davis focuses on durable businesses with above average margin returns, strong competitive advantages and durability. Companies also have to show strong management that have been in place for over five years as long-term investors can be sure that these are ethical, honest people that will help the business last. Additionally, the management team will determine valuation or what’s the right price of the company, targeting long-term free cash flow of businesses, owner earnings and how durable the cash is available.
The ETF currently has 37 positions, including top picks like Alphabet 6.8%, Amazon 5.3% and Naspers 5.0%. The portfolio includes a large 54.0% position in U.S. companies, along with 34.4% emerging markets and 11.6% developed countries.
Unlike traditional cap-weighted benchmarks, like the MSCI All Country World Index, the Davis Select Worldwide ETF includes an overweight position in emerging markets where investors may find greater opportunities, such as its 5.0% tilt toward Naspers, a South African brand, and a 3.8% position in Chinese e-commerce retailer JD.com.
Financial advisors who are interested in learning more about global opportunities can register for the Tuesday, May 2 webcast here.