It’s a big world…why limit your equity exposure just to the U.S.?
Among the relative strength-based strategies that we are most proud of here at Dorsey Wright is our Systematic RS International portfolio. This is a separately managed account strategy that we started managing on 3/31/2006. Over the last nearly 9 years, this portfolio of ADRs has outperformed the MSCI EAFE Index by 5.97% annually on a net basis. Over the last 3 and 5 years the margin of outperformance is even larger.
As of 2/28/2015
The idea with this strategy is to take a broad universe of ADRs and allow our relative strength model to determine which 30-40 to own. As shown in the table below, a number of our holdings have been in the model for years:
The actual purchase date of the stocks in client portfolios was typically the next trading day from the date shown in the “Added” column. A list of all historical holdings is available upon request.
One of the key benefits of relative strength models is that they allow an investor to stay with the winners. Without relying on a strict relative strength rank sell discipline, investors often are too quick to pull the trigger on winning stocks. This type of strategy also minimizes the need for an in-depth understanding of the fundamentals of these international companies. We can hardly pronounce most of their names, let alone understand the dynamics of their businesses! However, relative strength can rank them just the same. There also tends to be a lot of dispersion of returns in this universe of ADRs. More dispersion is typically a positive thing for relative strength strategies.
To learn more about this strategy and the platforms where it is available, please call or e-mail Andy at 626-535-0630, [email protected].
The performance represented in this brochure is based on monthly performance of the Systematic Relative Strength International Model. Net performance shown is total return net of management fees for all Dorsey, Wright & Associates managed accounts, managed for each complete quarter for each objective, regardless of levels of fixed income and cash in each account. The advisory fees are described in Part II of the adviser’s Form ADV. The starting values on 3/31/2006 are assigned an arbitrary value of 100 and statement portfolios are revalued on a trade date basis on the last day of each quarter. All returns since inception of actual Accounts are compared against the MSCI EAFE Total Return Index. The MSCI EAFE Total Return Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the United States and Canada and is maintained by MSCI Barra. A list of all holdings over the past 12 months is available upon request. The performance information is based on data supplied by the Manager or from statistical services, reports, or other sources which the Manager believes are reliable. There are risks inherent in international investments, which may make such investments unsuitable for certain clients. These include, for example, economic, political, currency exchange, rate fluctuations, and limited availability of information on international securities. Past performance does not guarantee future results. In all securities trading, there is a potential for loss as well as profit. It should not be assumed that recommendations made in the future will be profitable or will equal the performance as shown. Investors should have long-term financial objectives when working with Dorsey, Wright & Associates.
