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recommendation on good replacement for Harbor International fund
Hi folks, I was hoping the community good provide some good options on international funds I can consider to replace Harbor International in my portfolio. This has been a long term hold for me but the fund has underperformed over the past 3 and 5 year periods. Would greatly appreciate any advice you can provide here. thanks!
My opinion, go passive and spend your active risk budget in the most inefficient areas of the market such as International Small Caps and Emerging Markets.
Matthews Pacific Tiger, Artisan Intl Value, Capital World Growth&Income (American funds), Polaris Global Value, Vanguard Intl Growth, Artisan Global Equity, Artisan Global Value
I have been investing in Matthews Pacific Tiger for 5 years, and have been happy with it.
It is still large cap; but in comparison Harbor leans toward giant cap. It is heavily focused on industrials (and materials), while Harbor is focused on more defensive/value areas like healthcare and financials. That difference in emphasis could explain a lot of the performance differences. So a question is whether that trend will continue or reverse.
A fund with a much closer profile (59 stocks vs. 67, mostly similar sector weightings, 30% turnover vs. 25%) is LZIOX/LZIEX. While both Harbor Int'l and Lazard are classified as blend funds, they both come from a lineage of value oriented investing, which might help to explain the similarity.
In fact, APINX and LZIEX may resemble each other more closely than they resemble Harbor. Your memory is better than mine. The only Pictet fund I (or apparently VintageFreak) could remember offered in the US was Pictet Global Water. While Pictet is a significant presence in funds offered outside the US, it seems that their US-sold funds folded over a decade ago.
In particular, there was a Pictet International Equity fund. Whether that bears any resemblance to the Aston fund, I don't know. Here's the Bloomberg profile (stating that it existed from August 25, 2000 to Sept 8, 2003), the SEC filing to shut it down (along with Global Water), and the 2002 prospectus (showing six Pictet funds).
(2002 Prospectus) https://www.sec.gov/Archives/edgar/data/945774/000093506902000363/0000935069-02-000363.txt
To speak to performance, yes the FX hedge has benefited the Fund longer-term, however, over the past year (through 6/30) the EAFE was down 10% in both USD and local currency terms, and the Fund up 75 bps => hedge has not been the main reason for outperformance. Since inception, the Fund is outperforming EAFE (USD and local).
And if I'm not mistaken, JOHAX is closed to new investors.
The prospectus, um, hedges its currency policy by saying that it "may hedge a significant portion of its foreign stock investments", but the rest of the sentence suggests a general bias toward hedging: " in an effort to have its returns more closely reflect the market performance of its investments, rather than the value of the currency".
That is, it hedges to take currency out of the equation, not to protect one way against a rising dollar. That suggests hedging most of the time.
To build on JoJo26's statement, impressions often don't match reality. It feels like the dollar is going up, but it hasn't over the past year. I suspect that feeling is due to at least a couple of factors: the dollar is already very high (so just standing still, it feels like its value is growing), and Brexit pummeled the pound Sterling (making the dollar look good relative to one currency, though not relative to the world).