A Bronze-Rated Core Non-U.S. Stock Holding
George Georgiev: Bronze-rate Principal Diversified International is a solid option for investors trying to gain non-U.S. core equity exposure.
Managers Paul Blankenhagen and Juliet Cohn, along with four out of the seven analysts on the team have worked together for more than 13 years. They search for companies going through positive durable changes using bottom-up analysis and exploiting behavior biases. The durable changes they look for usually relate to product life cycles, regulation, and industry developments. The team wants to exploit the expectation gap between the companies' change in earnings potential and the prevailing consensus expectations.
As the fund's name suggests, this is a diversified portfolio with holdings ranging between 150-250 securities. The manager's portfolio construction discipline isolates stock selection as the key driver of relative results and avoids unintended systematic biases. Although there are no hard limits, the portfolio is unlikely to significantly deviate from the MSCI All-Cap-World ex-U.S. index's regional and sector exposures.
Performance has been solid, and the fund has historically exhibited less volatility than its benchmark. Finally, fees are below the category average here.