Fund Rationale: Harris Associates US Equity Fund

Harris Associates US Equity Fund (the “Fund”)
SGD Class H-R/A Shares (ISIN: LU0980610538)
SGD Class H-P/A Shares (ISIN: LU1201861249)

Fund Manager Page

Daily Price & Charts (Class H-R/A)
Daily Price & Charts (Class H-P/A)

Endowus has selected the Fund as it offers:

  • Contrarian, value-oriented exposure to US companies of all market capitalisations, with bias towards mid-to-large-cap;
  • Robust investment process emphasising on companies with greater upside potentials, and a long-term mindset that rewards patient investors;
  • Deep bench of three highly experienced co-PMs with an average experience of more than 20 years overseeing the strategy since inception, supported by a sizable team of US analysts;
  • Superior long-term returns that places the Fund consistently on top of its peer group over the past 10 years; and
  • Retail share class with 100% trailer fee rebated back to Endowus investors to achieve lower cost of access.

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Key Information

Fund Objective: Åims to achieve long-term capital growth by investing in US companies whose stocks are trading at a substantial discount to intrinsic value (using cash flow analysis as the main metric) and have owner-oriented management teams.

Suitability: Investors who are looking for an exposure to the US equity markets via investment in large cap stocks, can afford to set aside capital for at least 3 years (medium to long-term horizon), can accept temporary losses, and can tolerate volatility.

The Fund is on the CPF Investment Scheme - List A Fund, and is included under the CPF Investment Scheme for Ordinary Account. It has been classified by the CPF Board under the risk classification of “Higher Risk – Narrowly Focused (Country, USA)”.

Cost (Class H-R/A, Cash): 

Harris_Associates_US_Equity_Fund_Class_H-R_A_Cost_Retail_100__Rebate.png

  1. Total Fund-level Fees include fund management fee of up to 1.92%.
  2. This is a retail share class with 100% trailer fee rebated back to Endowus investors to lower the cost of access.
  3. Endowus does not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.

Cost (Class H-P/A, CPF): 

Harris_Associates_US_Equity_Fund_Cost_Class_H-P_A_Retail_100__Rebate.png

  1. Total Fund-level Fees include fund management fee of up to 1.68%.
  2. This is a retail share class with 100% trailer fee rebated back to Endowus investors to lower the cost of access.
  3. Endowus does not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.

Fund Characteristics

Fund Inception: 23 January 2015 (Class H-R/A), 26 March 2015 (Class H-P/A)
Share Class Inception: 12 June 2001
Benchmark: S&P 500 

Fund AUM: SGD 1.43bn
Source: MorningStar as of 23 July 2021. Please refer to the FMC page for the most updated AUM.

Regional Allocation:
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Sector Allocation:
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Source: MorningStar as of 31 May 2021. Allocation data indicate actual exposure as a percentage of the Fund's total Net Asset Value. Please refer to the Fund Manager Page for the most updated information on Fund Holdings and Breakdown. 

Selection Criteria

Endowus has selected the Harris Associates US Equity Fund for its value-oriented portfolio of all-cap US businesses. The investment process begins with a bottom-up assessment of an investable universe of more than 9000 companies, giving heavy emphasis to value-oriented criteria (i.e. a stock should be trading about 30% below its intrinsic value), but also considering quality factors like cash flow strength, long-term growth prospects, and the management’s sense of ownership towards their companies.

The strategy rewards high-conviction stocks by sizing them based on conviction levels, and the resulting portfolio is a concentrated basket of about 20-40 stocks with the top 10 holdings taking up more than ⅓ of the portfolio. Regardless, the team ensures that the portfolio is free from concentration risk by having limits for single issuers, and the portfolio spans across various sectors in the US market.

A deep bench of three highly experienced co-PMs have been leading the strategy since 2003 — Anthony Coniaris, Colin Hudson, and Robert Bierig bring forward an average experience of more than 20 years. The PMs are supported by a sizable team of US analysts, who hold frequent on-site meetings with company management teams to effectively understand and assess their intrinsic value.

Overall, the strategy has a successful track record of delivering consistent, top-tier performance in the last 10 years. However, investors should bear in mind that the strategy is extremely volatile and can experience heavy drawdown at times, especially in environments where value underperforms. The Fund also exhibits a contrarian nature, with the team deciding to hold, or even add onto detractors in an attempt to participate in rebounds — this approach has historically benefited the Fund and rewarded long-term investors who have patiently stayed with the strategy. Nevertheless, given the high-risk, high-return nature of this strategy that rides on a long-term investment horizon, we recommend that the Fund be used as a satellite allocation to complement a diversified core portfolio.

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Updated by Endowus: July 2021

** Disclaimer: Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.
The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.