Class Ticker CUSIP
A IVWAX 45070A107
C IVWCX 45070A503
I IVWIX 45070A206

The IVA Worldwide Fund Class A (NAV) ended the quarter on December 31, 2020 with a return of 10.65% versus the MSCI All Country World Index (Net) (Index) return of 14.68% for the same period. 

Markets started off shaky in the fourth quarter with uncertainty surrounding earnings season, U.S. elections in November and the continued pandemic. At the end of the quarter, optimism surrounding the success of the COVID vaccines, additional stimulus in the U.S. and a conclusion to the contentious U.S. election kept the recovery on track.  Value stocks, which had been the most beaten down throughout 2020 due to the pandemic, showed a rise over growth stocks in the fourth quarter. In mid-November through December, value names rebounded with a vengeance generally outperforming growth stocks. Overall there appeared to be a rotation to value toward the end of the fourth quarter. 

Our equities in the fourth quarter increased from last quarter returning 20.8% and contributing 11.4% to the portfolio. By sector, Consumer Discretionary contributed the most adding 3.9%, followed by Financials and Industrials returning 1.8% and 1.6%, respectively. Performance in Consumer Discretionary was led by our holdings in BMW, Richemont, LKQ Corporation and Sodexo. There were no sectors that detracted this quarter. By country, the U.S. contributed the most adding 3.3%, followed by France adding 2.2% and Switzerland adding 1.3%. Only one country detracted slightly this quarter, Japan -0.1%. 

The Fund’s equity exposure increased in the fourth quarter from 55.9% previously to 60.1% and our cash exposure decreased from 37.9% to 36.0%. Over the quarter we added some names to the portfolio, including Wells Fargo, Danone and UBS. Danone, a global French based food service company, had faced headwinds from some past sloppy capital allocation (overpaying for acquisitions) and challenges for their baby food brands with competition from Chinese companies.  We believe the price accounts for these issues and we took the opportunity to buy this quality company which focuses on healthy products and adheres to ESG guidelines.  UBS is a name we have owned, and added to our position significantly during the quarter when the discount widened.  We like the wealth management franchise at UBS and strong brand. Over the quarter, we have found some of the best values to be in Asia, and particularly in Japan.

Fixed Income was down -2.8% this quarter and its portfolio contribution was flat due to the small weighting in our portfolio during the quarter. We reduced our exposure from 2.5% in the previous quarter to 0.0% mid fourth quarter. Our gold exposure remains in a few select mining companies and increased from 3.7% in the previous quarter to 3.9%, detracting -0.3% from the portfolio. 

During the fourth quarter, our currency hedges detracted -0.1% from the portfolio. As we suspect the U.S. Dollar could continue to weaken, in November we eliminated all hedges (Korean won and British pound) aside from the Thai baht, which is currently at 89.6%.

Despite the more recent rebound for value names, 2020 has been hard for value investors. While value stocks are not discounted enough for us to be fully invested, on a relative basis we believe value stocks are a better place to be than overpriced growth or high quality stocks. It is still unknown whether or not deflationary forces will remain strong for the next 3-5 years or if inflation will rear its ugly head. The market turmoil of last year has shown that good stock picking is essential. As we get closer to country-wide and world-wide vaccines and there is light at the end of the tunnel in bringing the virus under control, the economy may begin to normalize and provide a clearer outlook.  High and rising debt levels continue to concern us now with 330% debt to global GDP, up from 200% in 2008.  We have to think this someday may have negative consequences and we continue to be cautious.  We thank you for your patience and support.  

Performance Information (as of December 31, 2020)

Average Annual Total Returns
Class 3 Months YTD 1 Year 5 Year 10 Year Since
Inception*
A (NAV) 10.65% -0.71% -0.71% 4.48% 4.33% 6.90%
A (with load) 5.09% -5.69% -5.69% 3.41% 3.79% 6.46%
C 10.41% -1.46% -1.46% 3.69% 3.54% 6.10%
I 10.68% -0.44% -0.44% 4.74% 4.59% 7.16%
MSCI All Country World Index (Net) 14.68% 16.25% 16.25% 12.26% 9.13% 8.83%
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