Foreign Large Blend

International Equity ADR

Investing primarily in the shares of non-U.S. companies primarily through American Depository Receipts, this strategy is research-driven and focused on bottom-up stock selection, not bold calls on macro or geopolitical conditions.

International Equity ADR strategy differentiators

  • Concentrated, core, all-weather profile.

  • Compelling view that excess returns are generated over time by investing in companies where free cash flow power is underestimated by the market.

  • A focus on uncorrelated idea generation and deep fundamental analysis.

  • Stock selection is the primary driver of excess returns over time.

We believe free cash flows (FCF) are the best measure of economic value creation and are a strong indicator of forward returns.

  • Forward FCF yield combines growth and valuation.
  • Forward FCF yield analysis cannot be passively replicated.
  • Over long time periods, analysis indicates companies with higher forward FCF yields outperformed regardless of prevalent market style.

Analysis of returns when dividing the Global Developed ex U.S. Markets into quintiles based on One-year forward free cash flow yield

Demonstrates relative returns of 1-year forward free cash flow yield by quintile
Best
Second
Third
Fourth
Worst

Data from January 1, 1987-December 31, 2023. Source: Empirical Research Partners Analysis. Monthly returns compounded and annualized. Does not reflect the performance of an investment product. Market performance does not reflect the impact of fees, expenses, and transaction costs of investing. Free cash flow is a measure of profitability accounting for all sources and uses of cash, including capital expenditures and acquisitions.

International Equity ADR strategy facts

  • Manager

    Principal Equities

  • Inception

    1 March 2012

  • Index

    MSCI All Country World ex-U.S. NTR Index

  • Targeted number of holdings

    30-50

  • Expected turnover

    20-40%

  • Investment vehicles

    IMA, U.S. Mutual Fund, CIT

Portfolio management

Principal Equities

We believe bottom-up stock selection is the most reliable and repeatable source of consistent performance. Through focused fundamental research and disciplined risk management, we strive to take advantage of persistent behavioral biases and impediments to capital flows, which often create market inefficiencies and opportunities.

Chief Investment Officer & Global Head of Equities, Portfolio Manager
George P. Maris, CFA
26 years of experience
Portfolio Manager
Paul Blankenhagen, CFA
32 years of experience
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Past performance does not guarantee future results.

Investing involves risk, including possible loss of principal.

Equity markets are subject to many factors, including economic conditions, government regulations, market sentiment, local and international political events, and environmental and technological issues that may impact return and volatility.

Investment guidelines are subject to change.

Not all investment options are available in all jurisdictions. Certain vehicles have not been registered with the United States Securities and Exchange Commission under the United States Securities Act of 1933 and may not be directly or indirectly offered or sold in the United States or to any United States person.

Principal Equities is an investment team within Principal Global Investors.