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Harding Loevner Has Succeeded by Staying Focused

This international-stock specialist shines by concentrating on quality.

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Harding Loevner has stuck with its core strengths and principles for more than a quarter century while many other fund shops have overextended themselves.  Indeed, the firm has only opened five funds since it was founded by a pair of overseas investing experts in 1989. All five of the funds are international-stock offerings. And the funds were launched in a very deliberate and sensible manner. For example,  Harding Loevner Frontier Emerging Markets (HLFMX), which is the youngest of the quintet, did not open until 2008, which was a decade after  Harding Loevner Emerging Markets (HLEMX) opened and several years after the older fund began to find a significant number of attractive stocks in the younger fund's area of interest.

Each of the funds follows the same quality-driven strategy, and that approach is both attractive and distinctive. Specifically, the firm's managers focus on healthy growers with clear competitive advantages as well as several other positive attributes. The managers pay ample attention to valuations and risk controls and move at a measured pace, but they are also comfortable loading up on sectors and countries that are packed with compelling investments. The end results are portfolios that have appealing mixes of more-conservative traits (such as high-quality metrics and moderate price multiples) and more-aggressive characteristics (such as notable sector and country overweightings). As a result, all of the funds provide significant downside protection without sacrificing too much upside potential.

William Samuel Rocco does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.