U.S. investors are chronically home-biased in their portfolios, even while international allocations have provided better opportunities in different market cycles.
In the upcoming webcast, Unpacking Global Markets: Getting Beyond Beta – A Conversation with Davis PM Danton Goei, Danton Goei, Portfolio Manager, Davis Advisors will discuss the case for international investing, and why an active approach may make sense.
Investors have looked to time-tested active approaches to enhance returns and provide greater stability, especially in times of heightened volatility. For example, the actively managed Davis Select Worldwide ETF (NasdaqGM: DWLD) and Davis Select International ETF (NasdaqGM: DINT) focus on long-term opportunities and incorporate the money managers’ judgment experience, high conviction, low turnover, accountability, and alignment. The Davis team screens for fundamental characteristics, including cash flows assets and liabilities, among other criteria.
The management team looks to durability, adaptability, and resiliency of a company for substantial competitive advantages, superior business models, attractive financials, and superior free cash flows. They also select those with a track record of good decisions, intelligent capital allocators, and alignment of interests. Additionally, the team focuses on discount to real value by calculating owner earnings to arrive at the actual value of a company.
The Davis Advisors management style primarily targets durable businesses with above-average margin returns, strong competitive advantages, and durability. Companies also have to show strong management that has 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. The management team will determine valuation, targeting long-term free cash flow of businesses, owner earnings, and the durability of available cash.
Active managers are also able to exploit market inefficiencies through time arbitrage; intangibles such as management, capital allocation, or competitive moats; sector inefficiencies; accounting arbitrage; business bias versus profession; and geographic inefficiencies, like knowledge of foreign markets.
Financial advisors who are interested in learning more about international market can register for the Thursday, February 25 webcast here.