Global Market Overview and Investment Themes

Global Investment Landscape

United States

  • Favorable conditions: low inflation, low interest rates, relatively full employment, moderate growth.
  • Current valuations and margins favor investing selectively.
  • Opportunities include both wide-moat businesses with room for margin expansion and earnings growth and select out-of-favor businesses with strong prospects.

Europe

  • Continues towards recovery from the financial crisis.
  • Opportunities include premier multinational leaders with strong, long-term global growth prospects.
  • Avoid companies with tepid growth tied solely to the European region.

Emerging Markets

  • Attractively valued, but opportunities and risks vary widely by country.
  • Opportunities include companies increasing market share in enormous and fast growing economies such as China and India and industry-dominating businesses in Brazil and Mexico.
Investment Themes

Rise of the Online Consumer Worldwide

  • The number of internet users has doubled since 2010 to 3.5 billion and is growing at 10% per year.
  • A vast opportunity exists in the years ahead: Global online purchases are growing at 17% per year, yet account for only 7% of total retail sales worldwide.
  • Many of the best opportunities for investing in this theme are international, as 75% of online purchases occur outside the U.S.
  • Beneficiaries include Vipshop, Naspers and Alibaba.

Expansion of Global Transportation

  • The movement of people and products worldwide is accelerating because of the expansion of world trade, the emerging global middle class, and the proliferation of the Internet worldwide.
  • The world's transportation infrastructure has not kept pace with rising demand. For example in India, there are currently only 400 commercial passenger aircraft for 1.2 billion people.
  • Beneficiaries include InterGlobe Aviation, ZTO Express and Safran.

Boom in College-Prep Education in Asia

  • College admissions in Asia is hyper-competitive, with large numbers of students competing at early ages for a finite number of spots.
  • In China, 300 million students in grades K-12 will compete for admission to top universities, with only a 3% acceptance rate versus 28% in the U.S.
  • Beneficiaries include: New Oriental Education & Technology, TAL Education and Tarena International.
Selected International Fund
High Conviction Best Ideas Portfolio Non-U.S. companies in both developed and emerging markets.

Overall Rating: 325 funds in the Foreign Large Growth category.
Outperformed MSCI ACWI (All Country World Index) ex US since Davis Advisors began managing the Fund.1
Benchmark Agnostic Does not mirror index, high active share of 95%.
Low Cost Expense ratio nearly a third lower than the category average.2
We Are Largest Shareholder Ensures interests aligned with clients.3