Over the weekend I added the FMI International Fund (FMIJX – $30.28) to the conservative portfolio replacing the Dodge & Cox International Stock Fund that has closed its availability to new investors. FMI International is a no-load mutual fund that runs a non-diversified portfolio of only about thirty to fifty stocks at any point. The fund seeks long-term capital appreciation by investing in a limited number of large capitalization (greater than $5 billion market cap) value securities, primarily of non-U.S. companies. The investment managers focus on established firms that have a sustainable competitive edge over their rivals and have the ability to survive the economic turmoil within their markets and geographies. The majority of the fund’s investments are in companies that have global operations rather than in firms whose business is limited to a particular country or geographic region. While concentrating on value, the fund is also looking for healthy companies that have above-average growth prospects and sound finances. As of December 31, 2014 FMIJX’s top ten holdings represented 37.6% of the entire portfolio of thirty-one stocks.
The fund had a large cash position at the end of the year, representing over 21% of its total assets of $1.2 billion. FMIJX is overweight in consumer staples, commercial and industrial services and manufacturing and, while the portfolio of names is short, the diversification by sectors is wide.
The fund normally invests at least 65% of its assets outside the U.S. The fund’s diversification by country as of the latest reporting quarter was:
FMIJX charges a reasonable 1% management fee, which is about 20% less than the average international stock fund. The fund is managed by Fiduciary Management of Milwaukee. The initial investment for both IRA and non-retirement accounts is $2,500, with additional investments of no less that $250. The fund returned 10.8% in the past twelve months ending December 31, 2014 and over 12% annually over the life of the fund since inception in December of 2010. The fund has a five-star (out of five) Morningstar rating over the past three years and should be a suitable addition to the conservative portfolio for those investors interested in exposure to well-focused international equities.
Hypothetical Growth of $10,000 over the past five years.
In the interest of full disclosure, I maintain a position in FMIJX and hold it in one of my managed accounts.