Veteran value fund manager, IVA Advisers’ Charles de Vaulx explains why he has nearly 40% of his portfolios in cash.
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Ask investors how they define value and you will probably get a variety of answers, an “eclectic” assortment, as this week’s guest, long-time value investor Charles de Vaulx put it.
Since its inception in January 2012, the long book of the Voss Value Fund, Voss Capital's flagship offering, has substantially outperformed the market. The long/short equity fund has turned every $1 invested into an estimated $13.37. Over the same time frame, every $1 invested in the S&P 500 has become $3.66. Q1 2021 hedge fund Read More
Investment styles go in and out of favor. An extreme example was during the tech boom when growth was hot. Investors were willing to pay up if a company had a dot com in its name, and revenues were increasing. Traditional value metrics such as price and earnings didn’t seem to matter, until of course they did. Growth crashed and value took the lead in the 2000s.
In the slow growth years after the financial crisis, growth made a strong comeback and value lagged badly. Last year it flipped again. For the first time in four years, value outperformed growth.
Until then, self-described value managers have had a tough time beating the overall market and even their benchmark indexes like the Russell 2000 value index, which are chock full of many lower quality companies that are cheap for good reasons: in many cases they are highly leveraged, have no earnings or have problems.
This week’s guest is a self-described value manager with a precise definition of what value means to him and his firm. He is Charles de Vaulx, the chief investment officer and co-portfolio manager of International Value Advisers, a long only, global money management firm he co-founded with Charles de Lardemelle in 2008, at the beginning of the financial crisis.
Before founding IVA, both spent many years working with legendary value investor and frequent WEALTHTRACK guest, Jean-Marie Eveillard. They manage several portfolios but their major holdings are in two mutual funds, their flagship IVA Worldwide Fund and the IVA International Fund. Both were closed to new investors in 2011 because they didn’t want them to get too big, and felt there were too few opportunities in the market, a view they hold today.
IVA Worldwide has outperformed its Morningstar peer group and market benchmark, with less than market risk since inception. It has trailed the market in recent years however, a fact that does not bother this investor whose goal is absolute returns overall with capital preservation in the short term and market outperformance over a full economic cycle. According to de Vaulx, we are not there yet. In the meantime he is holding nearly 40% of his portfolios in cash!
In this week’s EXTRA feature on our website de Vaulx discusses the severe disruption he is seeing in many industries and how they are handling it at IVA.
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Have a great weekend and make the week ahead a profitable and productive one!
Consider The Valuable Role Cash Can Play In Your Portfolio
Charles De Vaulx
Valuable Japanese Pharmaceutical
- Astellas Pharma Inc ADR (ALPMY)
- Stock price: $13.53
- 52-week range: $12.50-19.40 (as of 1/18/17)
International Value Advisers’ is holding nearly 40% of its portfolios in cash. Why are they taking such an extreme position in both their IVA Worldwide and IVA International Funds? Portfolio manager Charles de Vaulx says in his more than 30 year investment career he has never seen so much disruption in so many industries.