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Katie Reichart: Today we're talking about AllianzGI NFJ International Value. The fund is subadvised by NFJ, a value team that uses a dividend-focused approach across all of its funds. Every stock in the portfolio must pay dividend and look attractively valued based on price/earnings ratios. The team also uses price momentum to avoid buying falling knives and to sell stocks that are rapidly declining. We like that the process is disciplined and repeatable and has been well-executed through the years. The team structure also helps guard against any manager departures or retirements, though that hasn't been a problem.
The portfolio does stand out versus its foreign large-value peers because it can hold up to 50% of its assets in emerging markets. In 2013, the team was adding to its emerging-markets stake as those names sold off, and recently it held over a quarter of its assets in emerging markets, more than 5 times the category average.
Of course, that didn't help performance in 2013 when the fund landed in the category's bottom decile. But longer term, the fund has been very strong. It's been the top performer in the category, since its 2003 inception, and it has beaten its benchmark by an annualized 3 percentage points.
Overall, it's a strong choice for a core investment, but investors should be aware that it holds more emerging markets than most of its peers.