Multi Currency Lessons on Value


Multi currency lessons on value can be seen in one of the State Street Global Advantage Funds that are advised by Michael Keppler.

Recently we announced that we were adding reviews of the State Street Global Advantage fund to our multi currency studies in our Multi Currency Portfolio Course. Learn more about our Multi Currency Portfolio Course http://www.garyascott.com/catalog/bldh

The State Street Global Advantage Major Market Fund offers a multi currency portfolio in a basket of top value equity markets based on the analysis of Michael Keppler.

This fund is diversified in three currencies, pounds, euro and US dollars and eight equity markets, but represents investments globally because the shares held are in large international companies that earn all over the world.

This fund is currently diversified by country:

Cash 0.6 %

Other 0.5%

United States 11.1 %

United Kingdom 12.5 %

Spain 12.4 %

Netherlands 12.6 %

Italy 12.5 %

Germany 12.6 %

France 12.9 %

Belgium 12.3 %

A look at Keppler’s top rated major markets shows how closely the fund managers track Keppler’s recommendations.

Keppler’s top rated best value markets currently are Belgium, France, Germany, Italy, the Netherlands, Spain and the United Kingdom at equal weights.

A look at the capital weightings of each country in the global market shows this overweighting into Keppler’s concept of value.

Country Fund’s % Global %
France 12.89 % 5.17 %
Netherlands 12.64 % 1.36 %
Germany 12.60 % 4.38 %
United Kingdom 12.55% 11.08%
Italy 12.48 % 1.89 %
Spain 12.43 % 2.16 %
Belgium 12.35 % 0.61 %
United States 11.09% 46.78%
Switzerland 3.34 %
Japan 10.03 %
Norway 0.54 %
Australia 3.25 %
Austria 0.29 %
Canada 3.91 %
Denmark 0.45 %
Finland 0.97 %
Greece 0.40 %
Hong Kong 1.11 %
Ireland 0.33 %
New Zealand 0.07 %
Portugal 0.19 %
Singapore 0.54 %
Sweden 1.15 %
Other 0.36%
Cash 0.61 %

The objective of the fund is to outperform the Morgan Stanley Capital International (MSCI) World Index over holding periods of three to five years. The managers have accomplished this very well.

The fund was established in 1993 and has risen 358% since. The MSCI Index has risen only 194% in the same period.

Over five years the fund is up 103.17% versus 42.96% for the MSCI bell weather index. In three years the numbers are + 62.22% for the fund against 36.49% for the MSCI index. Even in the recent month of equity under performance, the fund is down -0.61% while the MCI index has dropped -3.82%.

See http://www.garyascott.com/2007/12/14/1923.html for more on Keppler’s value strategy.

Yet there is another lesson on value here.

The current major share position is:

Berkshire Hathaway Inc. US

Banco Santander Central Hispano S.A.

ING Groep N.V.

Telefónica S.A.

KBC Bankverzekering

ENI S.p.A.

UniCredito Italiano

Banco Bilbao Vizcaya Argentaria S.A.

Unilever N.V.

Note during this time of banking turmoil what half the companies in the ten largest investments of this do.

Fortis is Benelux based and is an international group of many European and US companies operating in the fields of insurance and financial services.

Banco Santander Central Hispano S.A. is a Spanish listed financial group that offers a range of financial products. At the primary level, the Bank’s operating units are segmented by geographical areas. The Continental Europe segment covers all retail banking, wholesale banking and asset management, and insurance conducted in Europe , with the exception of the operations of the Bank’s subsidiary, Abbey National plc (Abbey). The United Kingdom (Abbey) segment includes the operations of Abbey, which is focused on retail banking and insurance in the United Kingdom . The Latin America segment includes the financial activities conducted via the Bank’s subsidiaries.

ING Groep N.V. is a financial institution of Dutch origin offering banking, insurance and asset management services. ING covers tens of millions of clients in 50 countries with a workforce of over 100,000. It has offices globally and in the 2007 according to Forbes Global 2000, ING was the tenth-largest company in the world.

UniCredito Italiano calls itself the new truly European bank and Banco Bilbao Vizcaya Argentaria S.A. engages in the retail banking, asset management, private banking, and wholesale banking businesses worldwide.

In other words, at a time when the entire global banking and insurance industry is experiencing turbulence (due to the sub prime image), the fund has half its largest investments in this sector.

A look at the sector breakdown shows huge overweighting into the financial sector better.

Sector Allocation as of 11/30/2007

Sector Name Portfolio Index
Financials 40.16 % 23.07 %
Consumer Discretionary 8.18 % 10.24 %
Consumer Staples 7.76 % 8.81 %
Energy 7.12 % 10.06 %
Health Care 2.23 % 8.87 %
Industrials 6.39 % 11.37 %
Information Technology 4.20 % 11.04 %
Materials 7.50 % 7.10 %
Telecommunication Services 9.38 % 4.90 %
Utilities 7.08 % 4.54 %

What does this say about how to attain value? I would like to hear your view.

Until next message, may all your values be good.

Gary

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