International Value [[{“value”:”
Our Global strategy returned 21.2% in 2023, outperforming the MSCI World Value Index by 970 bps and underperforming the MSCI World Index by 260 bps.
While it was satisfying to significantly outperform our style benchmark, it was frustrating to underperform the MSCI World considering our companies delivered better earnings growth than the index. Our portfolio earnings grew 6.2% in 2023, compared to only 4.0% for the MSCI World.
The MSCI World benefitted from an outsized contribution from the Magnificent Seven U.S. mega-cap growth stocks, which as value investors we did not own. The Magnificent Seven accounted for 44% of the total index return in 2023. If we compare ourselves to the MSCI World Equal Weight, which still owns the Magnificent Seven, but at a much lower portfolio weight, we outperformed by 450 bps.
The Magnificent Seven also masked how well non-U.S. equities fared relative to U.S. equities. On the surface it looked like a weaker year for non-U.S. stocks. The S&P 500 outperformed the MSCI World by 250 bps, but the primary difference was attributable to the significant positive contribution from the Magnificent Seven stocks. To get a broader measure of how U.S. and non-U.S. stocks performed, the equal weighted version of these two indices is a better metric. Through that lens, the non-U.S. stocks fared much better, with the MSCI World Equal Weight outperforming the S&P 500 Equal Weight by 280 bps.”}]]
