Global Market Overview and Investment Themes

Global Investment Landscape

United States

  • Favorable conditions: low inflation, low interest rates, relatively full employment, moderate growth.
  • Current valuations and margins favor investing selectively.
  • Opportunities include both wide-moat businesses with room for margin expansion and earnings growth and select out-of-favor businesses with strong prospects.

Europe

  • Continues towards recovery from the financial crisis.
  • Opportunities include premier multinational leaders with strong, long-term global growth prospects.
  • Avoid companies with tepid growth tied solely to the European region.

Emerging Markets

  • Attractively valued, but opportunities and risks vary widely by country.
  • Opportunities include companies increasing market share in enormous and fast growing economies such as China and India and industry-dominating businesses in Brazil and Mexico.
Investment Themes

Rise of the Online Consumer Worldwide

  • The number of internet users has doubled since 2010 to 3.5 billion and is growing at 10% per year.
  • A vast opportunity exists in the years ahead: Global online purchases are growing at 17% per year, yet account for only 7% of total retail sales worldwide.
  • Many of the best opportunities for investing in this theme are international, as 75% of online purchases occur outside the U.S.
  • Beneficiaries include Amazon, Vipshop, Naspers and Alibaba.

Expansion of Global Transportation

  • The movement of people and products worldwide is accelerating because of the expansion of world trade, the emerging global middle class, and the proliferation of the Internet worldwide.
  • The world's transportation infrastructure has not kept pace with rising demand. For example in India, there are currently only 400 commercial passenger aircraft for 1.2 billion people.
  • Beneficiaries include InterGlobe Aviation, ZTO Express and Safran.

Boom in College-Prep Education in Asia

  • College admissions in Asia is hyper-competitive, with large numbers of students competing at early ages for a finite number of spots.
  • In China, 300 million students in grades K-12 will compete for admission to top universities, with only a 3% acceptance rate versus 28% in the U.S.
  • Beneficiaries include: New Oriental Education & Technology, TAL Education and Tarena International.
Davis International Fund & Davis Global Fund

Davis International Fund:

High Conviction Best Ideas Portfolio Non-U.S. companies in both developed and emerging markets.

Overall Rating. 330 funds in the U.S. Foreign Large Growth category.
Outperformed MSCI ACWI (All Country World Index) ex US 1, 3, 5, 7 year and since inception periods.1
Benchmark Agnostic Does not mirror index, high active share of 95%.
Low Cost Expense ratio less than half the category average.2
We Are Largest Shareholder Ensures interests aligned with clients.3

Davis Global Fund:

High Conviction Best Ideas Portfolio Invests in the U.S. and abroad in both developed and emerging markets.

Overall Rating. 720 funds in the World Large Stock category. Based on risk-adjusted returns.
Outperformed MSCI ACWI (All Country World Index) 1, 3, 5, 7, 10 year and since inception periods.1
Benchmark Agnostic Does not mirror index, high active share of 93%.
Low Cost Expense ratio significantly below the category average.2
We Are Largest Shareholder Ensures interests aligned with clients.3