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Fund Times

Oakmark International Reopens to New Investors

Outflows accelerate in 2018 amid poor performance for this Gold-rated fund.


 Oakmark International (OAKIX) has reopened to new investors as outflows have accelerated since midyear in the wake of dismal performance.

The fund, which has a Morningstar Analyst Rating of Gold, had closed to new investors in January 2018 after gathering $9.7 billion in inflows in 2017. Before then, it had been closed from October 2013 to July 2016.

The $32.9 billion-in-assets fund took in more than $5 billion in net inflows in the first half of 2018, but that flipped to $2.9 billion in outflows from July through November as performance suffered.

The strategy is on pace for its steepest calendar-year loss in absolute terms since the depths of the global financial crisis in 2008. Its more-than 22% loss for the year through Dec. 14, 2018, trailed 100% of the foreign large-blend Morningstar Category and was almost twice the 12% loss of the strategy's MSCI World ex USA Index prospectus benchmark. The fourth quarter has been particularly rough; the fund has shed nearly 15% compared with the roughly 11% losses for the category and peer group. Large helpings of European financial and auto industry stocks have upset the fund's results. The fund's 10-year, 15-year, and since-inception records remain strong.

The fund is reopening to take advantage of opportunities in the tumultuous international markets, said David Herro, who has been lead manager since the fund's 1992 inception. Reopening when non-U.S. stocks are down is consistent with Herro's contrarian value strategy. That cross-grain approach gives the fund more flexibility than other funds that are more apt to follow the crowd. The strategy, however, is still the largest actively managed fund in the foreign large-blend category and among the biggest non-U.S. equity funds overall. Capacity remains a concern, but at least the fund is reopening when trends are against it.

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