JD - Ariel Investments International (DM) Q1 2024 Commentary

2024-06-25 13:03:00 ET

Summary

• Ariel Investments, LLC is a global value-based asset management firm founded four decades ago in 1983. Ariel serves individual and institutional investors through five no-load mutual funds and eleven separate account strategies.
• Ariel International DM Composite increased +5.13% gross of fees in the quarter, lagging the +5.78% gain of its primary benchmark, the MSCI EAFE Index, but ahead of the +4.48% return of its secondary benchmark, the MSCI EAFE Value Index.
• Ariel’s non-consensus approach seeks to identify undervalued, out-of-favor, franchises that are misunderstood and therefore mispriced.
• We established positions in German-based automotive manufacturing company, Daimler Truck, multinational automotive manufacturing company, Stellantis, and Japanese video publisher, Bandai Namco Holdings.

Developed markets continued their upward trajectory in the first quarter. Investor enthusiasm around artificial intelligence ((AI)), a recovery in bank lending growth, lower energy costs, a pick-up in global manufacturing activity, recent structural reforms in Japan and the near-term prospect of a rate-cutting cycle in both the U.S. and Europe drove a broad-based rally. While growth bested value and large cap issues outperformed their small cap brethren, all sectors in the MSCI ACWI Index, except real estate, logged gains. Fears of a recession have been replaced with optimism and bullish market sentiment. Such turns in market psychology and economic forecasts highlight the challenges of market timing and the importance of taking a long-term view. Although exuberance, particularly for AI- themed mega-cap stocks may eventually prove to be excessive, the patient investor knows stock prices trade on fundamentals. Meanwhile, we continue to improve our upside capture across our international and global portfolios while remaining laser focused on preserving downside protection. Against this backdrop, the Ariel International DM Composite increased +5.13% gross of fees (+4.92% net of fees) in the quarter, lagging the +5.78% gain of its primary benchmark, the MSCI EAFE Index, but ahead of the +4.48% return of its secondary benchmark, the MSCI EAFE Value Index....

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