Responding to popular demand, Davis Advisors is adapting its successful international fund strategy into an actively managed ETF to help clients access opportunities in foreign markets.
On Friday, Davis Advisors rolled out the actively managed Davis Select International ETF (NasdaqGM: DINT), which has a 0.75% expense ratio.
The fund will be managed by veteran portfolio manager Danton Goei, whom joined Davis Advisors in 1998 and also looks after the Davis Select Worldwide ETF (NasdaqGM: DWLD).
“At Davis, we have made a long-term commitment to providing financial advisors and other investors with choice in how they access our equity strategies: through mutual funds, ETFs, and separately managed accounts (SMAs),” Chris Davis, Portfolio Manager and Chairman said in a note. “Danton Goei has a proven record as an outstanding international stock picker, managing Davis international and global portfolios for well over a decade. This new ETF applies the time-tested Davis Investment Discipline to international investing, and provides our clients with another option as they look to build wealth over the long term.”
The new Davis Select International ETF will seek to generate long-term growth of capital by investing in common stocks issued by foreign developed and emerging market companies, whereas DWLD covers world markets, including the U.S.
“These are benchmark agnotistic, relatively low-cost portfolios,” Dodd Kittsley, Director of Davis Advisors, told ETF Trends in a call. “Investors were asking for it as we have a successful Davis International Fund. Many investors wanted pure international exposure.”
Kittsley argued that DINT would pair well with an index-based strategy that covers broad market exposure. Traditional passive index-based international funds may include hundreds if not thousands of component holdings. However, DINT currently focuses on 29 opportunities, which “gives hand-picked selection.”
“With so many new ETFs coming to market, many think it is a broad new strategy,” Kittsley said, clarifying that the fund is not a new smart beta strategy but an actively managed ETF that reflects Davis’ traditional investment methodology. “It is the same strategy and same team.”
Top holdings as of March 2 include Naspers Ltd., Alibaba Group Holding Ltd. and Hollysys Automation Technologies Ltd.
Davis Advisors focuses on long-term opportunities that incorporate the money manager’s judgement experience, high conviction, low turnover, accountability and alignment. The Davis team screens for fundamental characteristics, including cash flows assets and liabilities, and other criteria.
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.
DINT “really is true active management based on a strategy that has been around for decades but in an ETF format,” Kittsley added.
For more information on new fund products, visit our new ETFs category.