It’s been a while since we’ve taken a look at our International Fund Group. Global markets have largely followed the market recovery here in the US with the S&P Depository Receipts index up 18% YTD vs. 20% of the S&P500TR. Last time we wrote about our international clones in mid May we highlighted that group’s Top 10 Popularity clone, citing its backtested annualized five year performance at nearly 18%/year vs. the benchmark index return of negative 3.6%/year over the same period.
Since we launched AlphaClone at the beginning of the year, this clone has been on a bit of a tear. It has returned 44.6% so far this year, more than double the 18.6% return for the benchmark index. Not bad. New holdings in this clone include Taiwan Semiconductor (TSM) and Anglogold (AU).
What might even be more impressive is that Top 10 Popularity isn’t even the best performing clone from this group. Top 3 & 5 Popularity perform even better and so do the Best Ideas clones. Here’s the breakdown as of 9/22 market close:
International Fund Group YTD
YTD 2009 Top 3 Popularity 59.7% Top 5 Popularity 49.8% Best 1 Idea 62.9% Best 2 Ideas 48.8% Best 3 Ideas 60.4% Best 5 Ideas 58.8%
The Best Ideas strategy invests in the top “new” buys from each fund in a group each quarter – so you can expect to see a higher turnover on these clones than clones based on a “top holding” or even “popularity” strategy. You would expect the higher turnover to translate into volatility but not necessarily, at least not in this case. As an example, the max drawdown this year on this group’s Best 1 Idea clone is negative 8% while for the S&P500 Depository Receipts Index (SXV) it is negative 18%. Kind of makes you want to learn a new language.
