What are international equities?
International equities are stocks of companies that are domiciled in countries outside of the U.S. They may operate in their home country and/or anywhere else in the world. At Bastion we invest in these companies through ADRs – or American Depository Receipts – that trade on U.S. exchanges.
Why Invest in international equities?
Diversification: Other countries have different economic and political cycles and their stock markets are not always synchronized with those in the U.S.; therefore, investing abroad can lower volatility and risk.
Opportunity: There are many attractive stocks with well recognized names that call other countries home, such as: Nestle, GSK, SAP and Adidas.
Appreciation/Income: According to most index providers, in aggregate, international markets are trading at significant discounts to that of the U.S. when considering current and future price/earnings and current price/book ratios. A narrowing of valuations could lead to outperformance of non-U.S. stocks. Excluding the U.S., global indices also tend to have higher dividend yields, offering an opportunity to generate income.
Why Invest in Bastion International Portfolios?
We do the work: We don’t throw stocks against the wall and see what sticks. We perform in-depth research on every candidate by forecasting five years of income statements, balance sheets and cash flows. In addition to poring over research, reviewing company reports and auditing company presentations, we kick the tires. We attend conferences, meet with managements and make onsite visits.
We are independent: We believe stock selection should drive performance. Although we are aware of the country and industry makeup of benchmarks, we build our portfolios from the bottom up and thus they may look much different than and, therefore, complement index ETFs.
We are invested – literally: All of our PMs have significant assets invested in the proprietary portfolios that they manage.
What international options do we offer?
The Bastion Value International Portfolio seeks capital appreciation by investing in stocks with: attractive forward valuations versus those of history or their industry, catalysts for revaluation, good quality of management and potential for income from current and future dividends.
The Bastion International Equity Income Portfolio seeks good current yield. Stock selection criteria include high but sustainable dividends, good quality management and attractive valuations. The Bastion International Equity Portfolio is constructed from the bottom-up so the country and sector exposure likely will be different than broad international indices and the Bastion Value International Portfolio due to the challenges in finding stocks with good dividend yields.
Keep up-to-date!
Clients can always see their portfolios on-line, but that can be boring; so we provide a quarterly update on the international markets via email (sign up here).