Oakmark Goes Globetrotting

Value-investing legend Bill Nygren is at it again. Harris Associates, the parent firm for the Oakmark family of funds, recently issued a prospectus for OakmarkGlobal Select, a new fund that will be led by Nygren and colleague David Herro. It aims to thrash the market by buying foreign equities on the cheap. Should you be interested? Read on to find out.

Value-driven
Nygren is an expert value investor who buys stocks for what he calculates to be less than their true worth. For example, current top holdings in his OakmarkSelect fund include Washington Mutual (NYSE: WM  ) and Pulte Homes (NYSE: PHM  ) -- both of which trade for below market-average P/Es.

What's more, Nygren has a solid track record as a fund manager. The Oakmark funds he manages with Kevin Grant and Henry Berghoef have racked up solid gains:

Funds

One-year
return

Five-year
return

10-year
return

Top Holdings

OakmarkI

4.16%

4.29%

8.00%

Washington Mutual;
McDonald's (NYSE: MCD  )

OakmarkSelect

6.82%

6.60%

---

Washington Mutual;
YUM! Brands (NYSE: YUM  )

Source: Oakmark

But Global Select is going to focus on international equities, which is Herro's specialty. Like Nygren, he's also posted a solid track record at the two funds he manages:

Funds

1-year return

5-year return

10-year return

Top Holdings

OakmarkInternational

26.73%

12.97%

11.41%

GlaxoSmithKline (NYSE: GSK  ) ;
British Sky Broadcasting

OakmarkInternational
Small Cap

31.38%

21.59%

13.74%

Julius Baer Holding;
JJB Sports

Source: Oakmark

What to watch
I've yet to get through the entire Oakmark Global Select prospectus, but a few things stick out from what I've read thus far:

  • It won't take undue risks. Global Select is going to give itself the flexibility to hold as much as 75% of its assets in U.S. equities, and plans to limit investments in emerging market to 15% of assets.
  • It will invest defensively. Nygren and Herro write that, from time to time, they may wish to invest in high-quality debt, money market securities, and cash.
  • It will be expensive to begin with. Classically, Oakmark funds have been a terrific value. Take Nygren's Oakmark fund; it charges only 1.07% annually. And Herro's International fund also sports a miniaturized 1.09% per year. Global Select, on the other hand, will likely begin much higher, at 1.75% for class I shares. Expect this ratio to decline as the fund adds money.

Invest with champions
With proven managers at the helm, Oakmark Global Select has the makings of a championship-caliber mutual fund -- as long as its expense ratio comes down a bit. Because as Fool fund guru Shannon Zimmerman likes to say, "With funds, you often get what you don't pay for."

If you'd like to learn more about superior mutual funds with low expense ratios, consider joining our Champion Funds service free for 30 days. The picks are beating their benchmarks by more than eight percentage points, and Shannon's model portfolios can help you transform your holdings into a market-thumping mix of funds. Click here to get started.

Fool contributor Tim Beyers is still a stock jock, but he's liking funds more and more every day. Tim didn't own shares in any of the companies or funds mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Fool profile. Oakmark I is a Motley Fool Champion Funds selection. GlaxoSmithKline is an Income Investor recommendation. The Motley Fool has an ironcladdisclosure policy.


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