Oakmark Global Select Fund - Investor Class
Average Annual Total Returns 12/31/21
Since Inception 10/02/06 8.92%
10-year 12.27%
5-year 10.81%
1-year 19.21%
3-month 2.29%
Gross Expense Ratio: 1.11%
Net Expense Ratio: 1.09%
Expense ratios are based on estimated amounts for the current fiscal year; actual expenses may vary.
The net expense ratio reflects a contractual advisory fee waiver agreement through January 27, 2022.
Past performance is no guarantee of future results. The performance data quoted represents past performance. Current performance may be lower or higher than the performance data quoted. The investment return and principal value vary so that an investor’s shares when redeemed may be worth more or less than the original cost. To obtain the most recent month-end performance data, view it here.
The Oakmark Global Select Fund returned 2.3% for the period ending December 31, underperforming the MSCI World Index, which returned 7.8%. The Fund finished the calendar year with positive absolute performance of 19.2%, compared to the index’s return of 21.8% during the same period. The Fund has returned an average of 8.9% per year since its inception in October 2006, outperforming the MSCI World Index’s annualized gain of 7.9% over the same period.
Once again, Alphabet (U.S.) was a top contributor to the Fund’s performance for the quarter. In October, the company reported a strong third quarter with both revenue growth and operating margin expansion (ex-other bets) above consensus. Search revenue grew 43% and YouTube advertising revenue also grew 43% with only a modest adverse impact from Apple introducing its new operating system, iOS14. Furthermore, total cloud revenue grew 45%, and Workspace grew both seats and average revenue per seat. Lastly, management bought back $12.6 billion of stock in the quarter, on track with our expectations for the full year. We continue to believe Alphabet is an attractive holding that trades at a significant discount to its intrinsic value.
Alibaba Group (China) was a top detractor for the quarter due to increased regulation from the Chinese government on local technology businesses, which continued to pressure the company’s share price. In addition, investors were disappointed with second-quarter earnings reported in November, marked by decelerating growth and lowered revenue guidance for the full year. Alibaba’s slowing growth was attributable to decreased retail spending in China, increased e-commerce competition and the company’s reinvestments into its merchant base. Although the company currently faces several headwinds, we believe Alibaba is an important driver of innovation in China, and several of its businesses have yet to fully scale. Finally, we believe the shares are undervalued given the quality of the company’s assets and its technological know-how.
During the quarter, we sold our position in Compass Group (U.K.) in favor of names that, in our opinion, offer more potential upside.
Additionally, we initiated the following positions during the quarter:
- Daimler Truck Holding (Germany), formerly Daimler’s truck and bus division, spun off from Daimler in December. The company is a leading producer of trucks globally, and we believe that it will benefit from continued improvements to its cost program as well as an optimized operating structure.
- Samsung Electronics (South Korea) was added to the Fund after having previously sold the investment in the fourth quarter of 2020. Samsung is South Korea’s top electronics company and a world leader in manufacturing semiconductors. With recent declines in the share price, the stock once again offered the necessary upside potential to be selected for our portfolio.
We continue to believe the Swiss franc is overvalued versus the U.S. dollar. As a result, we defensively hedged a portion of the Fund’s exposure. Approximately 15% of the Swiss franc exposure was hedged at quarter end.
Geographically, we ended the quarter with 55% of the portfolio in the U.S., 40% in the U.K. and Europe, and 5% in Asia.
We thank you for your continued support.
The securities mentioned above comprise the following preliminary percentages of the Oakmark Global Select Fund’s total net assets as of 12/31/21: Alibaba Group 1.8%, Alphabet Cl A 13.0%, Compass Group 0%, Daimler 3.6%, Daimler Truck Holding 0.9% and Samsung Electronics Pfd 1.3%. Portfolio holdings are subject to change without notice and are not intended as recommendations of individual stocks.
The MSCI World Index (Net) is a free float-adjusted, market capitalization-weighted index that is designed to measure the global equity market performance of developed markets. The index covers approximately 85% of the free float-adjusted market capitalization in each country. This benchmark calculates reinvested dividends net of withholding taxes. This index is unmanaged and investors cannot invest directly in this index.
Because the Oakmark Global Select Fund is non-diversified, the performance of each holding will have a greater impact on the Fund’s total return, and may make the Fund’s returns more volatile than a more diversified fund.
Investing in foreign securities presents risks that in some ways may be greater than U.S. investments. Those risks include: currency fluctuation; different regulation, accounting standards, trading practices and levels of available information; generally higher transaction costs; and political risks.
The percentages of hedge exposure for each foreign currency are calculated by dividing the market value of all same-currency forward contracts by the market value of the underlying equity exposure to that currency.
The information, data, analyses, and opinions presented herein (including current investment themes, the portfolio managers’ research and investment process, and portfolio characteristics) are for informational purposes only and represent the investments and views of the portfolio managers and Harris Associates L.P. as of the date written and are subject to change and may change based on market and other conditions and without notice. This content is not a recommendation of or an offer to buy or sell a security and is not warranted to be correct, complete or accurate.
Certain comments herein are based on current expectations and are considered “forward-looking statements”. These forward looking statements reflect assumptions and analyses made by the portfolio managers and Harris Associates L.P. based on their experience and perception of historical trends, current conditions, expected future developments, and other factors they believe are relevant. Actual future results are subject to a number of investment and other risks and may prove to be different from expectations. Readers are cautioned not to place undue reliance on the forward-looking statements.
All information provided is as of 12/31/2021 unless otherwise specified.
