The fundamental value shop closed its products to most new investors in February 2011 due to strong asset flows which created investment challenges for its portfolio managers - chief investment officer Charles de Vaulx and Chuck de Lardemelle, according to the firm.
'We believed that it was in the best interests of our existing investors to manage the pace of asset growth by restricting inflows,’ said the firm in a statement. ‘These restrictions were successful - asset growth normalized and Charles and Chuck were able to focus on stock picking without the distraction of rebalancing for large inflows.’
However, over the past four years and particularly over the past six months, outflows from IVA products have outpaced inflows, according to the firm.
As a result, it has decided to reopen its products to new investors ‘in an attempt to stabilize and maintain a healthy balance between inflows and outflows,’ said the firm. ‘We will continue to monitor the pace of investments and will not hesitate to consider restricting inflows when we believe it is again necessary.’
International Value Advisers, which was formed in October 2007, is co-owned by Citywire + rated pair de Vaulx and de Lardemelle as well as managing partner Michael W. Malafronte and security analyst Thibaut Pizenberg, who all used to work at First Eagle.
In the US, the firm offers two 40 Act mutual funds, the $7.9 billion IVA Worldwide fund and the $3.8 billion IVA International fund as well as two separate accounts - the $12.5 billion IVA Diversified Global strategy and $4.8 billion IVA Diversified International strategy, all managed by de Vaulx and de Lardemelle, according to the firm’s website.
Launched in 2008, the IVA Worldwide fund ranks 60 out of 144 Flexible Portfolio Funds tracked by Citywire. It has returned 17.9% over the past three years until the end of July whereas its benchmark the MSCI All Country World index has risen 8.19% over the past three years.
Also launched in 2008, the IVA International fund ranks 48 out of 68 International Multi-Cap Core funds tracked by Citywire. It has returned 14.4% over the same period, compared to the MSCI All Country World index (ex-US) which has risen 5.07% over the past three years.
According to Morningstar Direct data, the IVA Worldwide fund has seen over $86 million of outflows while the IVA International fund has seen almost $67 million in outflows as of July 31.
Morningstar analyst Gregg Wolper who covers both funds noted in May that they benefit from two ‘very experienced managers,’ but the managers’ philosophy of not buying anything ‘unless they're convinced the price is cheap enough to limit the chance of serious losses’ can often lead to huge cash stakes.
Wolper pointed out that the Worldwide fund had 40% of its assets in cash throughout 2017 and into the first quarter of 2018 while the International fund had 36.5% of its assets in cash on April 30, a high level for both funds.
Although the cash levels in both funds are still high, the two managers seem to have cut back on their cash stake. At the end of June, the IVA Worldwide fund and the IVA International fund had 37.7% and 22.7% in cash and cash equivalents respectively, according to their latest factsheets.
New York-based International Value Advisers had $17.7 billion in assets under management as of June 30.