Fayez Sarofim & Co. Global Equity ADR Strategy

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Overview

Why Invest in this Strategy?

  • Seeks to provide quality growth exposure with lower volatility and less risk than the MSCI World Index benchmark. Seeks to invest in enduring companies that the managers believe are resilient, well-positioned, and whose earnings can potentially deliver solid growth over the long term
  • Designed to be part of a core global holding, with long-term focus and low portfolio turnover
  • Seeks to provide exposure to companies with dominant global positions in structurally attractive industries with clear competitive advantages
  • Diversified portfolio investing in both U.S. and non-U.S. stocks

Strategy Assets
(Millions)

$2,242  As of 06/30/24

PE RATIO
(1-YEAR FORWARD)

27.41  As of 07/31/24

PB RATIO
(1-YEAR FORWARD)

6.51  As of 07/31/24

Return on
Equity (ROE)

44.01% As of 07/31/24

Median
Market Cap
(billions)

$234.54 As of 07/31/24

Weighted AVG.
Market Cap
(billions)

$1,040.18  As of 07/31/24

EPS Growth
(5-Years)

14.93% As of 07/31/24

Strategy Assets captures all assets the investment manager manages in that discipline for all client types.

Price/Earnings Ratio - Price-to-earnings (P/E) is the ratio of the market price of a firm’s common stock to its current (or predicted) earnings per share. Price/Book Ratio - Price-to-book value (P/B) is a ratio used to compare a stock's market value with its book value. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value (assets minus liabilities).

Return on Equity is the percentage a company earns on its total equity for the time period listed. The calculation is net income divided by end-of-year net worth. The resulting figure is multiplied by 100.

Median Market Cap is the midpoint of market capitalization (market price multiplied by the number of shares outstanding) of the stocks in a portfolio. Half the stocks in the portfolio will have higher market capitalizations; half will have lower.

Weighted Avg Market Cap - Weighted average market cap is the average market capitalization of corporations in a fund or index, weighted by the percentage of the holding in the fund or index.

Earnings per share (EPS) growth is a figure that represents the annualized rate of net-income-per-share growth over the trailing five-year period for the stocks held by a portfolio.

Investment Firm

Fayez Sarofim & Co.
Year Founded: 1958
Newton Investment Management Logo

Fayez Sarofim & Co. was founded in 1958 to provide investment counseling services and has remained focused exclusively on this one business. The firm is privately held and based in Houston, Texas. Fayez Sarofim & Co. has benefited from the tenure of its senior investment professionals, who have been with the firm an average of 18+ years. The firm’s extensive client list and many long-term client relationships attest to its singular focus for over five decades.

Investment Philosophy
Fayez Sarofim & Co. believes that enduring growth is predicated on industry dominance. Dominant businesses are usually to be found in large companies, with the potential to produce above-average earnings growth and market leadership over sustained time periods. They believe that stock price appreciation is based on earnings growth over the long term.

  • Broad Industry Analysis

    The portfolio management team is singularly focused on global investing with a deep and experienced research staff.

  • Deep Investment Research

    Fayez Sarofim & Co. then identifies potential attractive companies, and then examines its valuations. The considered investment company is subject to ongoing research to validate or overturn Fayez’s thesis.

  • Stock Selection and Portfolio Management

    The firm’s investment committee synthesizes the results and decides if the stock should enter the portfolio. The net result of the firm’s process is a portfolio with an average of 40–60 holdings.

Portfolio Managers

  • Alan R. Christensen

    Alan R. Christensen, CFA

    Years at the firm: 19

    Years managing strategy: 4

    Years in industry: 29

  • Catherine Crain

    Catherine Crain, CFA

    Years at the firm: 31

    Years managing strategy: 24

    Years in industry: 35

  • William Gentry Lee, Jr.

    William Gentry Lee, Jr., CFA

    Years at the firm: 26

    Years managing strategy: 14

    Years in industry: 30

  • Christopher Sarofim

    Christopher Sarofim

    Years at the firm: 36

    Years managing strategy: 27

    Years in industry: 38

Performance

Performance

  • Display Net data
  • Display Gross data
  • Monthly
  • Quarterly
As of 07/31/24
Annualized Returns
Inception Date YTD 1YR 3YR 5YR 10YR SINCE INCEPTION
Fayez Sarofim & Co. Global Fund Composite 07/15/93 8.64 6.73 12.53 9.16 5.65 2.48 13.97 10.55 11.97 8.61 10.65 7.33
Fayez Sarofim & Co. Global Fund Composite
MSCI World Index N/A 13.72 13.72 18.34 18.34 6.85 6.85 12.06 12.06 9.53 9.53 -
As of 06/30/24
Annualized Returns
Inception Date YTD 1YR 3YR 5YR 10YR SINCE INCEPTION
Fayez Sarofim & Co. Global Fund Composite 07/15/93 8.92 7.27 15.40 11.94 6.64 3.45 14.37 10.94 11.62 8.27 10.68 7.37
Fayez Sarofim & Co. Global Fund Composite -
MSCI World Index N/A 13.72 13.72 18.34 18.34 6.85 6.85 12.06 12.06 9.53 9.53

Sources: Fayez Sarofim & Co., BNYMSC and FactSet.

Past performance is no guarantee of future results. Current performance may be lower or higher than the performance quoted. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.

Performance information is based on the Composite. Net returns assume the reinvestment of dividends, and are net of a 3.0% annual account advisory fee. Gross returns assume the reinvestment of dividends, but do not reflect the deduction of any account advisory fees or other expenses that an investor would pay, which would reduce returns. The performance shown is that of the Global Fund composite. Some of these accounts contain ordinary shares as well as ADRs, so the performance shown is not a Global ADR composite. There is no Global (SMA) ADR composite as it is a Unified Managed Account (UMA) and therefore there are no portfolios to construct a composite. Gross-of-fee returns do not reflect the deduction of any expenses, including transaction charges. The net of fee performance is shown using a fee of 3%, which is the historical industry standard highest fee in the wrap account industry. Please note that this figure may double count certain transaction expenses that are embedded in the Institutional Composite's gross of fees performance and the model 3% wrap fee.

The performance presented is the performance earned by the Fayez Sarofim & Co. Global Fund Composite (“Institutional Composite”) created by Fayez Sarofim & Co. The Institutional Composite is managed by the same investment team using a substantially similar investment process that is used for the SMA Strategy. The SMA Strategy is provided on a non-discretionary basis, model-only basis. The performance presented of the Institutional Composite is supplemental performance.

Download Most Recent GIPS Performance Report for all GIPS Disclosures.

The benchmark for the strategy is the MSCI World Index. The Index captures large and mid-cap representation across 23 Developed Markets (DM) countries. With 1,513 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Index returns are calculated as net return indicating that this series approximates the minimum possible dividend reinvestment. The dividend is reinvested after deduction of withholding tax, applying the rate applicable to non-resident individuals who do not benefit from double taxation treaties. MSCI uses withholding tax rates applicable to Luxembourg holding companies. An investor cannot invest directly in any index.

Calendar Year Performance

  • Display Net data
  • Display Gross data

    Composite Inception Date: July 15, 1993

    Sources: Fayez Sarofim & Co., BNYMSC and FactSet.

    Past performance is no guarantee of future results. Current performance may be lower or higher than the performance quoted. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.

    Performance information is based on the Composite. Net returns assume the reinvestment of dividends, and are net of a 3.0% annual account advisory fee. Gross returns assume the reinvestment of dividends, but do not reflect the deduction of any account advisory fees or other expenses that an investor would pay, which would reduce returns. The performance shown is that of the Global Fund composite. Some of these accounts contain ordinary shares as well as ADRs, so the performance shown is not a Global ADR composite. There is no Global (SMA) ADR composite as it is a Unified Managed Account (UMA) and therefore there are no portfolios to construct a composite. Gross-of-fee returns do not reflect the deduction of any expenses, including transaction charges. The net of fee performance is shown using a fee of 3%, which is the historical industry standard highest fee in the wrap account industry. Please note that this figure may double count certain transaction expenses that are embedded in the Institutional Composite's gross of fees performance and the model 3% wrap fee.

    The performance presented is the performance earned by the Fayez Sarofim & Co. Global Fund Composite (“Institutional Composite”) created by Fayez Sarofim & Co. The Institutional Composite is managed by the same investment team using a substantially similar investment process that is used for the SMA Strategy. The SMA Strategy is provided on a non-discretionary basis, model-only basis. The performance presented of the Institutional Composite is supplemental performance.

    Download Most Recent GIPS Performance Report for all GIPS Disclosures.

    The benchmark for the strategy is the MSCI World Index. The Index captures large and mid-cap representation across 23 Developed Markets (DM) countries. With 1,513 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Index returns are calculated as net return indicating that this series approximates the minimum possible dividend reinvestment. The dividend is reinvested after deduction of withholding tax, applying the rate applicable to non-resident individuals who do not benefit from double taxation treaties. MSCI uses withholding tax rates applicable to Luxembourg holding companies. An investor cannot invest directly in any index.

    Portfolio Asset Allocation

    Portfolio

    Download Total Holdings
    As of 07/31/24
    Composition Allocation
    Microsoft Corporation 9.50
    Amazon.com, Inc. 5.75
    Novo Nordisk A/S Sponsored ADR Class B 5.50
    Apple Inc. 5.00
    Alphabet Inc. Class C 4.50
    L'Oreal S.A.Unsponsored ADR 4.50
    LVMH Moet Hennessy Louis Vuitton SE Unsponsored ADR 4.50
    ASML Holding NV ADR 3.50
    Visa Inc. Class A 3.50
    Chevron Corporation 3.00

    Asset Allocation

        Source: Fayez Sarofim & Co. Top 10 equity weights are based on a representative model account, exclusive of cash. Total model holdings are from the same representative model account, inclusive of cash. Individual accounts may vary.

        Risk Stats

        Main Risks

        All investments involve risk, including loss of principal. Equities are subject to market, market sector, market liquidity, issuer, and investment style risks to varying degrees. Small and midsized company stocks tend to be more volatile and less liquid than larger company stocks as these companies are less established and have more volatile earnings histories. Investing in foreign denominated and/or domiciled securities involves special risks, including changes in currency exchange rates, political, economic, and social instability, limited company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries. American Depositary Receipts (ADRs) do not eliminate the currency and economic risks for the underlying shares in another country. ADRs are subject to many of the same risks as the foreign securities to which they relate.

        Risk Metrics

        As of  08/31/24  3-Year trailing Standard Deviation Alpha Beta R-Squared Sharpe Ratio Tracking Error Information Ratio
        Fayez Sarofim & Co. Global Equity ADR Strategy
        		17.78 0.08 1.03 93.40 0.20 4.55 0.00

        All risk metrics are provided by Morningstar. The index used in the calculations are determined by Morningstar which may not be the strategy’s primary benchmark. The index Morningstar used for this analysis is MSCI ACWI Index.

        Standard deviation - It is a statistical measure of the degree to which an individual portfolio return tends to vary from the mean, based on the entire population. The greater the degree of dispersion, the greater the degree of risk. In mutual funds, the standard deviation tells us how much the return on the fund is deviating from the expected normal returns.

        Alpha - It is a measure of a security's or portfolio's excess return.

        Beta - It is a measure of a security's or portfolio's volatility, or systematic risk.

        R-Squared - It is a statistical measure that represents the percentage of a fund's or security’s movements that are explained by movements in a benchmark index.

        Sharpe Ratio - It is a risk-adjusted measure that measures reward per unit of risk.

        Tracking Error - is a measure of the volatility of excess returns relative to a benchmark.

        Information Ratio - is a geometric measure of risk-adjusted performance. The Information Ratio is a version of the Sharpe Ratio, but unlike the Sharpe Ratio, the benchmark does not have to be the risk-free return.


        Literature

        Literature

        PRODUCT MATERIALS

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        Fayez Sarofim & Co. Looking to the Long Term - Brochure Download
        Fayez Sarofim & Co. Global Equity ADR Strategy - Investment Report Download
        Fayez Sarofim & Co. Global Equity ADR Strategy - Presentation Download
        Fayez Sarofim & Co. Global Equity ADR Strategy - Top 10 Rationale Download
        Fayez Sarofim & Co. Global Equity ADR Strategy - Commentary Download
        GIPS Report

        GIPS Report

        Investors should carefully review and consider potential risks before investing. Please see Main Risks section above for additional information regarding investment risks.

        Separately Managed Accounts (SMAs) are offered by BNY Mellon Securities Corporation (BNYMSC) in its capacity as a registered investment adviser.

        Fayez Sarofim & Co. is an SEC-registered investment adviser and a wholly owned subsidiary of The Sarofim Group, Inc. Sarofim, among other services, provides advisory services for equity portfolios under various agreements related to wrap-fee programs, and is introduced to wrap-fee program sponsors primarily through the efforts of BNY Mellon Securities Corporation under the terms of a solicitation agreement between Sarofim and BNY Mellon Securities Corporation. With respect to such wrap-fee programs, BNY Mellon Securities Corporation acts as the account administrator and serves as the liaison between Sarofim and the program sponsors and the program sponsors’ clients and receives in consequence a portion of the fee charged by the program sponsor for its account administration services. BNY Mellon Securities Corporation plays a similar role with respect to the unified managed account (UMA) programs for which Sarofim provides investment management or supervisory services. For such UMA programs, BNY Mellon Securities Corporation functions on behalf of Sarofim as the primary administrative contact with program sponsors and acts as account administrator, and receives in consequence a portion of the fee charged by the program sponsor for providing such services. Sarofim is not affiliated with BNY Mellon Securities Corporation or The Bank of New York Mellon Corporation. BNY Mellon Securities Corporation is a subsidiary of BNY Mellon. BNY Mellon is the corporate brand of The Bank of New York Mellon.

        This information has been distributed for informational purposes only and should not be considered as investment advice or are commendation of any particular investment, strategy, investment manager or account arrangement and should not serve as a primary basis for investment decisions. Information displayed has been obtained from sources believed to be reliable, but not guaranteed. Please consult a legal, tax or financial professional to determine whether an investment product or service is appropriate for a particular situation. No part of this information may be reproduced in any form, or referred to in any other publication, without express written permission.

        MARK-287605-2022-07-22