THE SICKENING DIVES by equity markets around the globe in the past year or so have provided an object lesson in the defensive properties of value funds.
The MSCI World Index has lost 21 per cent and the broad United States benchmark, the S&P 500, is down 23 per cent since June 29 last year.
In contrast Jason Yee, who launched his Janus Global Value Fund on that day, said it had gained slightly since then. The fund's net asset value, at US$10 a share when it was issued, stood at US$10.11 on Wednesday giving a gain of 1.1 per cent, Mr Yee said.
'I guess I'm quite pleased,' said Mr Yee, who works from Janus' headquarters in Denver, Colorado. 'It's certainly been a difficult year to start a fund.'
Mr Yee looks to buy companies which are trading at a discount of at least 40 per cent to what he calculates as their intrinsic value. Those kind of cheap valuations can limit the downside of the 30 to 50 stocks in his portfolios.
It was all about a risk-return trade-off, he said. Investors buying funds focusing on companies hoping to grow aggressively could double or triple their money if all went well. But they had to accept the possibility they could lose 50 per cent of their money - which is exactly what has happened since March 2000 marked the end of the 1990s bull run in developed markets.
'What we are trying to do is narrow the range,' Mr Yee said.