Charles de Vaulx: Leaving the Nest

This article first appeared in the February/March 2011 issue of Morningstar Advisor magazine. Get your free subscription here.

In just longer than three years, International Value Advisers has amassed more than $13 billion in assets under management.

That's quite a feat for a firm, known as IVA,

that invests primarily in equities, considering the rough-and-tumble markets that investors have endured during that period. Its asset figure puts IVA among the 100 largest mutual fund families.

Thus, it would be stretching it to call the firm "undiscovered," especially considering that one of its top investment people, Charles de Vaulx, is fairly well-known among investors-- thanks in part to his many years managing funds at First Eagle, both in partnership with value-investing legend Jean-Marie Eveillard and on his own. During those years, de Vaulx established close relationships with many clients and shareholders, who appreciated his candor.

Still, IVA isn't a household name. And while you may think you know the firm's strategy and management well, there's more to tell-- including the fact that the firm will close its doors to investors on Feb. 18.

Nimble Is a Sticking Point
In some sense, IVA was born out of necessity. In 2007, a group of senior managers and analysts left First Eagle. Leaving were de Vaulx; Chuck de Lardemelle, who was First Eagle's director of research; Simon Fenwick, analyst and once manager of First Eagle Gold SGGDX; and analysts Thibaut Pizenberg and Michael Malafronte. While the reasons for their departures were varied (not surprisingly, the story differs somewhat depending on which side you talk to), the group had a clear idea of what it wanted for the future. Having worked well together for a number of years, the managers and analysts wanted to stick together--and, importantly, to continue to practice the patient and uncommon value approach they had employed on the First Eagle funds, something that couldn't be taken for granted at other firms. So, they formed a partnership and launched IVA.

Having control over their business was important to the partners. No outside investor was invited as a partner. They also wanted the ability to close their funds when they saw fit. De Vaulx had long argued that his approach requires a small and nimble asset base, because of regular forays into less-liquid smaller companies and high-yield bonds.