The Global Value Team shares their current investment thinking and provides a mid-year update on the Global, Overseas and U.S. Value Funds.
While investors in gold may find it gratifying to see the price of bullion rise after moving sideways for six years, we make no prediction about whether the recent uptrend will continue. Around the globe, there are many unresolved issues—including financial, monetary and political developments in Europe—that could create significant volatility in financial markets and in the short-term price of gold.
Following an inadvertent tilt to cyclical value stocks in 2018, we have focused on returning the portfolio to its customary position of balance, where individual stock elements may be the determinant factors in stock performance rather than the macroeconomic environment. While the economic background will always influence stocks, ideally, we look for stocks where the stories of corporate change can transcend the macroeconomic environment.
Over the course of the quarter, macroeconomic developments exerted a powerful pull on the markets. In April, better-thanexpected economic data and accommodative central banks allayed concerns about global growth and propelled a rebound in risk assets. In May escalation of the US/China trade dispute darkened the outlook for global growth, sending stock markets lower and prompting rallies in perceived “safe haven” assets such as Treasuries and the Japanese yen. In June, more explicitly dovish comments from the Federal Reserve assuaged investors’ concerns and sent markets higher.
“One of the things that's important that we do a little bit differently at First Eagle, is we don't define value just in purely statistical terms."
Though the current business cycle—the longest in US history—is showing signs of age, the potential timing of and impetus for its end remain uncertain.
Conventional wisdom dictates that everyone should save as much as they can, as early as they can, for as long as they can in order to live a dignified life in retirement.
The long-simmering trade dispute between the US and China has intensified in recent days.
Nurtured by ever-cheaper computing power and the datafication of modern life, the rate of advancement in technologies based on artificial intelligence (AI) and offshoots like machine learning has a
Despite a downturn in May, the second quarter as a whole was a positive one for investment markets: global equities generally rose, credit spreads remained tight and implied equity volatility (as measured by the CBOE Volatility Index) was well below average. Interest rates remained extremely low both in the United States and abroad—particularly in Europe, where some $13 trillion of bonds are trading at negative yields.1 In addition to equities and bonds, currencies also experienced unusually subdued levels of volatility
Primary issuance picked up in the high yield market; proceeds were used largely for refinancing, which is a sign of health, and issuance quality remained surprisingly high for this late point in the credit cycle. Leveraged loan issuers were on a different course, however, and the leverage on new loans reached an all-time high.
It’s by design that companies in Matthew McLennan’s portfolios aren’t exactly those that set investors’ hearts racing with excitement. “We’re happy to own businesses with what we consider a gradual positive drift to them,” he says. In this article, Matthew McLennan and Kimball Brooker describe how they assess “fade risk” in a number of industries, what makes them uneasy about the state of the world today, why their exposure to gold is higher than normal, and why they see mispriced value in Fanuc, Orkla, Schlumberger, Jardine Matheson and Weyerhaeuser.
The timing and conditions of Brexit remain unclear, but most estimates suggest that both the UK and EU economies will suffer as frictions are introduced into their economic connection.
Investors and consultants frequently ask for the Global Value team’s views on sustainable investing. While we do not offer strategies that focus in this area, we do pay close attention to issues of sustainability because they may be a key to a company’s resilience over the long term. Some investors see the energy sector as the antithesis of sustainability, but we see things differently. In this interview, Benj Bahr, energy-sector analyst on the Global Value team, explains why.
Fund of America is a fundamental research-driven strategy that seeks to identify undervalued companies that can benefit from catalysts for corporate change.
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.
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.
First Eagle High Yield Fund named one of the top bond funds in IBD’s 2018 Best Mutual Fund Awards. Read the full article to learn more.
In this paper, we explain gold’s power as a potential hedge, examine its history, consider the advantages and disadvantages of bullion, gold stocks and ETFs, and explore the differences between hed
Over the last several years, the retirement landscape has markedly changed. Americans are living longer and need to plan accordingly. At the same time, with defined contribution plans replacing defined benefit plans both at corporations and, more recently, at public entities, individuals also need to shoulder greater responsibility for their own retirement saving.
We believe that First Eagle Funds are a natural fit for defined contribution plans because we believe in the key tenets of successful retirement plan investing. Our funds have distinctive risk/reward characteristics, and they have performed well in some periods when other investments were struggling.
Since Joseph Engelberger, “the father of robotics,” developed the world’s first industrial robots in the 1950s and installed them in a General Motors plant in 1961, the robotics industry has made tremendous advances. Today, there are about 1.9 million industrial robots deployed worldwide across a wide range of applications in fields such as manufacturing, logistics, consumer services, defense and healthcare.
How can investors protect their equity portfolios against a market crisis?
Kimball Brooker Jr. and Sean Slein discuss First Eagle Investment Management and the Global Income Builder Fund.
First Eagle's Thomas Kertsos believes that gold has unique risk-reward characteristics to be able to potentially preserve value in real terms in the long-term and provide diversification and resili
Co-Portfolio Manager Ed Meigs discusses the Global Income Builder strategy, the importance of flexibility in the search for income and the team's unwavering focus on seeking downside protection.
While the gold price has been volatile over the last year, it has remained above the lows reached in 2015. In this brief commentary, Portfolio Manager Thomas Kertsos and Research Analyst Max Belmont offer their insights into current trends.
To mark the Fund's 30-year anniversary on April 10th, Harold Levy recalls the creation of the the Fund of America strategy, reflects on what's changed over 30 years and reaffirms his commitment to providing prudent stewardship of shareholders' assets.
We think the alternative to benchmark-oriented investing is active value management that's oriented to absolute - not relative - returns.
Investor capital continues to pour out of active vehicles and into passive ones. Investors evidently believe that passive funds are attractive because their fees have been low and their returns have been good. In our view, this is an overly simplistic way to think about today’s market environment. Whether in equities or in fixed income, passive strategies attempt to replicate the broader returns of the markets. If the broader markets themselves are priced for low returns, investors who choose passive vehicles face the prospect of singularly disappointing returns over the long term.
Investors in the First Eagle Global Fund have generally stayed invested substantially longer than the average mutual fund investor. We think downside protection is one of the reasons.
The United Kingdom’s vote to leave the European Union has already led to significant turbulence in global currency and securities markets. Beyond this immediate reaction, we believe that political and economic uncertainty could continue for several years as the UK negotiates its new relationship with the EU.
Income is a here-and-now need, but it also has a future dimension. Investors want to be sure of meeting their current financial obligations, and they want to be just as confident about funding future ones, as well. That is why the First Eagle Global Income Builder Fund seeks to generate current income while also providing long-term growth of capital. Our approach is based on three distinctive features: asset-class flexibility, global range and a focus on downside protection.
In a recent video interview our Gold Fund Portfolio Manager Matt McLennan and Associate Portfolio Manager Thomas Kertsos took a deeper look into the gold and gold mining equities. They addressed the role of gold within a portfolio, cash versus gold, long-term history of gold and the role of gold-mining equities.
Rising volatility spurs many investors to sell indiscriminately and, in particular, to flee stocks they see as underperformers. This fear-driven flight may send share prices down into bargain territory, where value investors can acquire them.
For more than 25 years, First Eagle Fund of America has delivered higher total returns with lower volatility than most of the relevant benchmarks and Morningstar categories.
Active share measures the percentage of a fund’s portfolio holdings differing from its benchmark. Active share can range from 0% (index fund) to 100% (no commonality with the benchmark index).The greater that percentage, the stronger the indication that the fund employs true active management over time. A 2009 Yale School Of Management study on active management found that funds with higher active share generally outperformed against their benchmarks over time on a historical basis.
During periods of significant market disruptions or in the event that suitable investment opportunities become less available, the Fund has the flexibility to hold higher cash positions as evidenced in the past.
We look to gold to provide protection against the unintended consequences of government interventions, bank bailouts, long-term imbalances and currency crises.
Managers who are given the flexibility to go anywhere and own out-of-benchmark stocks and who make independent investment decisions, in our view, are more likely to outperform over the long term.