Fund Commentary - Columbia Management
Transcription
Fund Commentary - Columbia Management
Fourth Quarter 2014 INVESTMENT COMMENTARY CLASS A | LAIAX CLASS C | LAICX As dedicated international investors we will continue to seek out the best opportunities we can find for shareholders. CLASS R | CACRX CLASS R4 | CCIRX CLASS R5 | CAIRX CLASS Z | ACINX Columbia Acorn International Fund performance Columbia Acorn International Class A declined 2.69% (excluding sales charge) in the fourth quarter, outperforming its benchmark. For up-to-date performance information, please check online at columbiamanagement.com. The fund’s primary benchmark, the S&P Global Ex-U.S. Between $500M and $5B Index, fell 3.48% in the period. For the year, the fund was down 4.58%, lagging the 1.76% decline of the benchmark. By comparison, the large-cap, developed market MSCI EAFE Index (Net) declined 3.57% in the fourth quarter and was down 4.90% for the year. Fund strategy Consistent, time-tested investment process to identify foreign small- and mid-cap companies that management believes will be good long-term investments Growth-at-a-reasonable-price (GARP) philosophy, emphasizing stocks that we believe have growth prospects and are trading at reasonable valuations Supported by a large internal analyst team specializing in smalland mid-cap investing that follows an intensive, bottom-up approach to stock selection Market overview After a strong return in 2013, international markets struggled to provide positive U.S. dollar returns due to a number of factors. First and foremost was the strength of the U.S. dollar against nearly all world currencies. The combination of a recovering U.S. economy and increasing economic and political risk in Eastern Europe and the Middle East sent many investors fleeing to the security of the U.S. dollar. The euro fell over 11% and the British pound fell over 6% to the dollar. In Japan, the easy-money policies of Abenomics continued, helping drive the yen down over 13% vs. the dollar. Combined with periods of global anxiety over missing Malaysian airliners, violence in the Middle East and the potential for an Ebola pandemic, there was very little news to calm the international investor. The second major factor impacting international markets for the year was the rising specter of global deflation, most notably felt in the declining price of most commodities, particularly oil. While oil’s dramatic fall in price has triggered debate over whether the cause is U.S.-led supply or declining global growth, there is considerable consensus that slow growth is driving the fall in other commodities, such as iron ore and copper. The flight to safety, as reflected in the roughly 0.85% drop in U.S. 10-year bond yields, only further reinforced the notion of little inflation in an increasingly hostile world Average annual total returns (%) for period ended December 31, 2014 3-m on. 1-year 3-year Class A w ithout sales charge -2.69 -4.58 12.16 8.11 8.59 Class A w ith 5.75% maximum sales charge -8.28 -10.05 9.97 6.84 7.95 Class Z -2.60 -4.28 12.50 8.47 8.95 S&P Global Ex-U.S. Betw een $500m-$5b Index -3.48 -1.76 10.98 7.14 7.65 Columbia Acorn International Expense ratio1 Share class A Without waiver (gross) 1.29% With waiver (net) — Z 0.94% — 5-year 10-year Performance data shown represents past performance and is not a guarantee of future results. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data shown. Please visit columbiamanagement.com for performance data current to the most recent month end. Class Z shares are sold at net asset value and have limited eligibility. Columbia Management offers multiple share classes, not all necessarily available through all firms, and the share class ratings may vary. Contact us for details. Columbia Management Investment Distributors, Inc. 225 Franklin Street, Boston, MA 02110-2804 columbiamanagement.com blog.columbiamanagement.com 800.426.3750 1090626 (01/15) Fourth Quarter 2014 INVESTMENT COMMENTARY Columbia Acorn International Top holdings (% of net assets): as of December 31, 2014 Coronation Fund Managers Ltd outside the United States. It is notable that the current 10-year yield of less than 2% implies a negative real return, if the Federal Reserve meets its long-term inflation target of 2%. Sector weights (%): fund vs. benchmark as of December 31, 2014 1.78 Industrials Naspers Series N 1.30 Cons disc CCL Industries Inc 1.21 Wuxi Pharmatech Cayman-ADR 1.09 Zee Entertainment Enterprise 1.05 Cons staples Neopost SA 1.00 Materials Partners Group Holding AG 0.99 Aalberts Industries NV 0.95 Telecom svcs Wirecard AG 0.94 Coronation Fund Managers Ltd 0.30 Naspers Series N 0.22 Zee Entertainment Enterprise 0.17 Wirecard AG 0.15 Unibet Group PLC-SDR 0.13 Top five detractors - Effect on return (%) as of December 31, 2014 Neopost SA -0.30 Baytex Energy Corp -0.29 Halyk Savings Bank-GDR Reg S -0.20 Shaw Cor Cl A -0.19 Trilogy Energy Corp -0.16 22.90 11.70 10.12 6.50 8.89 8.65 6.74 6.04 Health care Energy Top five contributors - Effect on return (%) as of December 31, 2014 17.05 Info tech 0.96 22.15 20.35 16.03 Financials Amcor Limited Top holdings exclude short-term holdings and cash, if applicable. Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. 18.99 Columbia Acorn International 2.75 4.17 S&P Global Ex-US Between $500 Million and $5 Billion Index 1.32 1.65 0.40 Utilities 0 3.10 5 10.48 10 15 20 25 Source: FactSet Contributors and detractors For the fourth quarter, top contributions to fund returns came from a country that is often forgotten in global market discussions — South Africa. This country represented about 2.5% of the fund’s investable universe, but over 5% of fund assets. Three of the fund’s largest positions, Coronation Fund Managers, Naspers and Rand Merchant Insurance, are based in South Africa and generated strong returns for both the quarter and the year, in a market that rose less than 7% in U.S. dollar terms in the benchmark. One factor that these companies all have in common is excellent managements that have allowed them to expand overseas into other markets. Coronation Fund Managers is leveraging off a successful domestic operation to expand into the international fund management business, opening up new avenues of growth. While operating a pay-television franchise in sub-Saharan Africa, Naspers generates the bulk of its value from its investment in Hong Kong-based Tencent, an internet software/mobile application business. Rand Merchant Insurance is growing through its Australian car insurance operations. Finding overlooked gems in often under-covered markets has been a hallmark of the Acorn style and has borne strong returns in South Africa. The quarter’s largest detractor in absolute terms was not a particular stock but rather the energy sector in its entirety. Oil prices fell a whopping 40% in the fourth quarter from approximately $93 per barrel to under $56 in one of the sharpest commodity selloffs in history. The ramifications for many small- to mid-sized oil service providers are significant, as the major oil companies are expected to cancel many exploration and production projects that no longer make economic sense. 2 Fourth Quarter 2014 INVESTMENT COMMENTARY For the year, Macau gaming operator Melco Crown Entertainment fell on negative sentiment, as the industry came under greater scrutiny from mainland China. Neopost, a France-based provider of postage meter machines, declined during the year on poor contract renewals with the French public sector. While 2014 was a disappointing year, both Melco Crown Entertainment and Neopost have been longterm winners for the fund’s shareholders. Outlook As we look ahead to 2015, international markets remain out of favor, as industry pundits continue to champion U.S. economic growth and currency strength as a reason for keeping more assets stateside. While no one knows the future direction of markets, as dedicated international investors we will continue to seek out the best opportunities we can find for shareholders. Commentaries now available via email Stay informed about your investments by subscribing to receive commentaries and other fund updates by email. Simply register with our subscription center and choose the publications you’d like to receive. We’ll take care of the rest. Subscribe 3 Fourth Quarter 2014 INVESTMENT COMMENTARY Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. For a free prospectus and, if available, a summary prospectus, which contains this and other important information about the funds, visit columbiamanagement.com. The prospectus should be read carefully before investing. Investment Risks Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. International investing involves certain risks and volatility due to potential political, economic or currency instabilities and different financial and accounting standards. Risks are enhanced for emerging market issuers. Investments in small- and mid-cap companies involve risks and volatility greater than investments in larger, more established companies. Columbia Acorn Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA and managed by Columbia Wanger Asset Management, LLC. The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Columbia Management Investment Advisers, LLC (CMIA) associates or affiliates. Actual investments or investment decisions made by CMIA and its affiliates, whether for its own account or on behalf of clients, will not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not account for individual investor circumstances. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon, and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results and no forecast should be considered a guarantee either. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that the forecasts are accurate. Additional performance information: All results shown assume reinvestment of distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 1 Expense ratios are generally based on the fund's most recently completed fiscal year and are not adjusted for current asset levels or other changes. In general, expense ratios increase as net assets decrease. See the fund's prospectus for additional details. The S&P Global Ex-U.S. Between $500 Million and $5 Billion Index is a subset of the broad market selected by the index sponsor representing the mid- and small-cap developed and emerging markets, excluding the United States. The MSCI EAFE Net: This series approximates the minimum possible dividend reinvestment. The dividend is reinvested after deduction of withholding tax, applying the rate to non-resident individuals who do not benefit from double taxation treaties. MSCI uses withholding tax rates applicable to Luxembourg holding companies, as Luxembourg applies the highest rates. Indices shown are unmanaged and do not reflect the impact of fees. It is not possible to invest directly in an index 4
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