Aristotle Capital Management
International Equity

Strategy Overview

  • Fundamental, bottom-up stock selection process applied to a universe of companies with market capitalizations typically in excess of $2 billion at initial investment
  • Focused strategy tends to be characterized by high active share and low turnover
  • Initial position size is typically 2%‐3%
  • Portfolio is composed mainly of non‐U.S.‐based companies and may invest up to 20% in emerging markets, utilizing both American Depositary Receipts (ADRs) and foreign ordinary shares
  • Objective is to achieve attractive long-term returns versus the benchmarks while mitigating risk over a complete market cycle

 

All portfolio holdings must meet the following three criteria:

  • High Quality: Companies in great and/or improving lines of business.
  • Attractive Valuation: Assess the value of the company utilizing private equity approach to public markets.
  • Compelling Catalyst: Actions/events currently underway that may propel a company forward over the next three to five years.

Strategy Inception Date: January 1, 2008

Assets: $5,033.7 million (as of 12/31/2023)

Benchmarks: MSCI EAFE Index (Net); MSCI ACWI ex USA Index (Net)

Minimum Market Cap: Typically $2 billion at initial purchase

Cash: Typically less than 5%

Sector Weights: Within 50%-200% of MSCI EAFE Index major sector weights

Country Weights: Within 50%-200% of MSCI EAFE Index major country weights

Vehicles Offered: Separate Account; Mutual Fund; Collective Trust

As of: 12/31/2023

Performance

Trailing (%) QTD YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception1
Int’l Equity Composite (Gross) 10.41 18.54 18.54 3.32 8.81 5.17 5.63
Int’l Equity Composite (Net) 10.31 18.00 18.00 2.84 8.30 4.66 5.13
MSCI EAFE Index (Net) 10.42 18.24 18.24 4.02 8.16 4.28 2.76
MSCI ACWI ex USA Index (Net) 9.75 15.62 15.62 1.55 7.08 3.83 2.35
Calendar Year (%) 2023 2022 2021 2020 2019 2018 2017
Int’l Equity Composite (Gross) 18.54 -20.48 17.01 10.55 25.09 -9.74 23.77
Int’l Equity Composite (Net) 18.00 -20.86 16.46 10.03 24.50 -10.19 23.20
MSCI EAFE Index (Net) 18.24 -14.45 11.26 7.82 22.01 -13.79 25.03
MSCI ACWI ex USA Index (Net) 15.62 -16.00 7.82 10.65 21.51 -14.20 27.19
¹The Aristotle International Equity Composite has an inception date of January 1, 2008.
Past performance is not indicative of future results. Performance results for periods greater than one year have been annualized. Returns are preliminary pending final account reconciliation. Returns are presented gross and net of actual investment advisory fees and include the reinvestment of all income. Gross returns will be reduced by fees and other expenses that may be incurred in the management of the account. Net returns are presented net of actual investment advisory fees and after the deduction of all trading expenses. This material is not financial advice or an offer to buy or sell any product. Please see important disclosures at the end of this web page.

Characteristics

  Int’l Equity MSCI EAFE
Number of Holdings 38 783
Active Share (%) 89.8
Annualized Turnover (5 Yrs, %) 12.0
Wtd. Avg. Market Cap ($B) 80.2 91.7
Dividend Yield (%) 2.2 3.1
Return on Equity (5 Yrs, %) 15.6 15.9
Price/Earnings (TTM) 16.0x 13.7x
Price/Book Value 3.7x 3.2x

The Portfolio Characteristics shown are based on a representative account. Please see important disclosures at the bottom of this web page.

Portfolio Risk/Return Statistics

Since Inception (1/1/08) Int’l Equity MSCI EAFE Index (Net)
Upside Market Capture (%) 101 100
Downside Market Capture (%) 91 100
Annualized Alpha (%) 2.94
Tracking Error (%) 4.37
R-Squared 0.94 1.00
Beta 0.96 1.00
Standard Deviation (%) 17.83 18.05
Information Ratio 0.66
Sharpe Ratio 0.26 0.10

Largest Holdings (%)

Accenture (Ireland) 5.0
Brookfield (Canada) 4.0
Munich Reinsurance (Germany) 3.9
Sony Group (Japan) 3.7
Ashtead Group (United Kingdom) 3.6
Pan Pacific International Holdings (Japan) 3.4
Cameco (Canada) 3.4
LVMH Moët Hennessy Louis Vuitton (France) 3.0
Nemetschek (Germany) 3.0
Safran (France) 2.8
Total 35.8

Region Weights (%)

Sector Weights (%)

Sources: CAPS CompositeHubTM, SS&C Advent, FactSet, MSCI, eVestment
The Portfolio Characteristics shown are based on a representative account. The Largest Holdings shown are based on total account of the model portfolio. The Region Weights and Sector Weights shown are based on the equity composition of the model portfolio and exclude cash. The Portfolio Risk/Return Statistics figures shown are gross of fees and based on the Aristotle International Equity Composite (the Composite). The representative account was chosen since, in our view, it is the account within the Composite that most closely reflects the portfolio management style of the strategy. Not every client’s account will have these exact characteristics. The actual characteristics with respect to any particular client account will vary based on a number of factors, including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment. You should not assume that any of the securities transactions, sectors or holdings discussed in this report are or will be profitable, or that recommendations Aristotle Capital Management, LLC (Aristotle Capital) makes in the future will be profitable or equal the performance of the securities listed in this report. There is no assurance that any securities, sectors or industries discussed herein will be included in or excluded from an account’s portfolio. Aristotle Capital reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This is not a recommendation to buy or sell a particular security. Recommendations made in the last 12 months are available upon request. Past performance is not indicative of future results. The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. The MSCI EAFE Index consists of the following 21 developed markets countries: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. The MSCI ACWI ex USA Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the United States. The MSCI ACWI ex USA captures large and mid cap representation across 22 of the 23 Developed Markets (DM) countries (excluding the United States) and 25 emerging markets countries. With over 2,300 constituents, the Index covers approximately 85% of the global equity opportunity set outside the United States. DM countries include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the UK and the US. EM countries include: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. The volatility (beta) of the Composite may be greater or less than that of the benchmark. It is not possible to invest directly in these indices. Excess returns are investment returns in excess of the benchmark or index returns. Dividend Yield is the ratio of a firm’s dividends each year relative to its share price. Active Share is a measure of the percentage of stock holdings in a manager’s portfolio that differ from the benchmark index. Turnover is calculated by taking either the total purchases or total sales of portfolio securities (whichever is less), over a particular period, and dividing it by the monthly average market value of the portfolio during that period. Weighted Average Market Capitalization is a dollar-value measurement of the size of companies in a portfolio or index. In such a weighting scheme, an average figure is derived from the market capitalizations of each company (their market prices multiplied by the number of shares outstanding) multiplied by their weights in the portfolio or index. Return on Equity is the amount of net income returned as a percentage of shareholders’ equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. Upside Market Capture is a measure of the performance in up markets relative to the market itself. Downside Market Capture is a measure of the performance in down markets relative to the market itself. Annualized Alpha is a measure of risk-adjusted excess return over the style index. Tracking Error is the annualized standard deviation of the differences between the portfolio and index returns. R-Squared is a measure of how closely related the variance of the manager returns and the variance of the benchmark returns are. Beta is used to measure market risk. It is defined as the average relationship, over time, of the portfolio’s rate of return to the style index. Standard Deviation is a measure of risk or variability of returns over time. Higher deviation represents higher volatility. Information Ratio is a measure of returns above the benchmark (usually an index) relative to the volatility of those returns. Sharpe Ratio is a measure of the excess return over the risk-free rate relative to standard deviation to determine the reward per unit of risk. This material is not financial advice or an offer to buy or sell any product.

All investments carry a certain degree of risk, including the possible loss of principal. Investments are also subject to political, market, currency and regulatory risks or economic developments. International investments involve special risks that may in particular cause a loss in principal, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and higher transaction costs. These risks typically are greater in emerging markets. Securities of small- and medium-sized companies tend to have a shorter history of operations, be more volatile and less liquid. Value stocks can perform differently from the market as a whole and other types of stocks. The material is provided for informational and/or educational purposes only and is not intended to be and should not be construed as investment, legal or tax advice and/or a legal opinion. Investors should consult their financial and tax adviser before making investments. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Information and data presented has been developed internally and/or obtained from sources believed to be reliable. Aristotle Capital does not guarantee the accuracy, adequacy or completeness of such information.

Aristotle Capital Management, LLC is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Aristotle Capital, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2, which is available upon request. ACM-2401-21

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