Diamond Hill International Fund Q4 2024 Commentary

2025-03-10 11:45:00 ET

Summary

• Global equity markets faced significant declines in Q4 2024, with Europe and Asia Pacific regions hit hardest due to rising energy costs, political instability, and weak demand.
• Our portfolio performed in line with the benchmark, driven by strong stock selection in health care and communication services, but hindered by industrials and IT sectors.
• We added Prosus NV, MAX Co., and Krones to our portfolio for their undervaluation and growth potential, while exiting Swatch and Bolsa Mexicana de Valores.
• Despite global economic uncertainties, Japan and India offer compelling investment opportunities due to corporate governance improvements and dynamic growth environments, respectively.

Market Commentary

Global equity markets faced headwinds in the fourth quarter, as the MSCI ACWI ex-USA Index fell by 7.6%. European markets bore the brunt of the decline, dropping 9.7%. Rising energy costs, weakening industrial output and escalating political instability created a challenging backdrop. Germany’s automotive sector continued to cede ground to competition from Chinese electric vehicle manufacturers. At the same time, a no-confidence vote in France that toppled the government raised fears of fiscal tightening and potential tax increases. Adding to Europe’s woes, the prospect of US tariffs on European exports amplified geopolitical and economic vulnerabilities....

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