- Adheres to a strict value discipline, seeking fundamentally sound foreign companies seen as undervalued.
- Employs a disciplined investment process that combines systematic stock screening with fundamental research.
- Invests in dividend-paying stocks, which have historically offered lower volatility and may currently benefit from tax legislation changes. (Source: Ford Investor's Service, NFJ Investment Group)
Process & Philosophy
NFJ adheres to a strict value philosophy, seeking undervalued, fundamentally sound companies. What sets the firm apart from other value-oriented managers is its emphasis on risk management. To temper the risks associated with equity investing, NFJ maintains broad industry diversification and requires that each stock in its International Value portfolios pay a dividend-a characteristic they believe is an important sign of financial stability.
DISCIPLINED INVESTMENT PROCESS
NFJ's investment process enables it to identify international stocks offering attractive valuations and long-term growth potential. At the same time, the process seeks to manage total portfolio risk.
BUILDING THE PORTFOLIO
NFJ follows a disciplined process to identify the most attractive stocks.
- Screen approximately 1,200 ADRs of $1 billion and above, and classify into approximately 50-60 industries.
- Using fundamental research, select one candidate from each industry that has a low price-to-earnings ratio (P/E) for that industry and seeks to invest primarily in dividend paying securities.
- Rank candidate stocks by P/E (low to high) and selects approximately 40-60 stocks.
- Determine weightings (between 1%-4% at time of investment) by value factors such as low P/E, high yield, low price-to-book, and price momentum.
- Continually repeat the research process to identify new buy and sell candidates. Sell a stock when an alternative stock with equally strong fundamentals demonstrates a substantially lower P/E ratio and/or a substantially higher dividend yield.
Why Invest in this Strategy
Expanding Opportunities Abroad
Investors often focus too heavily on domestic stocks, allowing attractive opportunities abroad to go unnoticed. NFJ's International Value managed account portfolio is a convenient way to invest in these undervalued stocks.
NFJ Investment Group has a strong track record and consists of a team of managers dedicated to a pure, deep value approach to equity investing. Each of these professionals participates in the investment process, serving as portfolio manager and securities analyst. This team approach means broader resources are committed to portfolio construction.