Fund of America is a fundamental research-driven strategy that seeks to identify undervalued companies that can benefit from catalysts for corporate change.
While we suffered extreme volatility, we continued to believe that for the great majority of these stocks, our investment thesis remains sound. We have been steadfast because, in our view, the idiosyncratic nature of our stock theses—the corporate change elements—have been temporarily overridden by multiple compression, as opposed to thesis erosion or significant earnings deterioration.
While this may have seemed like a replay of early 2009, the periods were actually quite different. In 2009, the financial market crisis was deeper, and it was accompanied by an economic crisis. In the fourth quarter of 2018, we saw a meaningful correction in global stock markets, but we did not see meaningful weakness in the underlying real economies of the world. Unemployment rates, for example, remained at cyclical lows. This was a moment of risk aversion rather than a crisis.
The fourth quarter of 2018 saw a dramatic change in world equity markets as the narrow bull market of the first nine months of the year gave way to a broad bear market. At the end of September, markets were at or close to their peaks, and implied volatility, as measured by the CBOE VIX Index, was in the low teens.
High yield had been more resilient earlier in the year but cracked in the fourth quarter, with lower-quality issues—CCC bonds—bearing the brunt of the market’s weakness. Outflows from ETFs and other passive structures proceeded in reasonably good order during the quarter, but we are not confident that future outflows will be managed as smoothly.
The Global Value Team shares current investment thinking and a year-end update on the Global, Overseas, U.S. Value, Global Income Builder and Gold Funds.
We cannot predict what will happen next in economies or markets, but 2018 had the feel of a transitional year. Volatility, which in our view, had been muted for an unexpectedly long period of time, returned in force during the year—first in February and then again in the fourth quarter.
First Eagle’s Global Fund marked its 40th anniversary on January 1, 2019. From the time that Jean-Marie Eveillard—a pioneer in global value investing—assumed leadership of the Global Fund, it has consistently employed a disciplined, benchmark-agnostic, value-oriented philosophy.
In the latest video insight from The UK Investment Association, First Eagle's Matt McLennan and Kimball Brooker discuss why their focus on downside protection may help create sustainable, long-term value for investors.
Matt McLennan reflects on his first decade managing First Eagle's Global Value team, and the challenges and potential rewards of value investing. See what excites him about the next 10 years.
We live in interesting times. Over the past decade, we have witnessed the global financial system on the precipice of collapse, monetary interventions that are unprecedented in modern times, the European community on the brink of disintegration, and populist uprisings that would have been unimaginable as recently as five years ago.
The portfolio managers of the Global Income Builder Fund discuss investing with a focus on downside protection and positioning for late-cycle risks.
Matt McLennan and Kimball Brooker, managers of First Eagle Global Fund (SGENX), recently spoke with Advisor Perspectives to discuss the Fund’s go-anywhere approach.
First Eagle’s Global Value team has adopted the value investment philosophy first developed by Benjamin Graham and later refined by Warren Buffett.
Valuation drives everything, according to Sean Slein and Kimball Brooker, portfolio managers of the First Eagle Global Income Builder Fund. Investing with a perceived “margin of safety” in equities and fixed income, the fund aims to provide both current and future income.