The IVA Worldwide Fund Class A (NAV) (“the Fund”) ended the quarter on September 30, 2018 with a return of 1.93% versus the MSCI All Country World Index (Net)(“Index”) return of 4.28%, bringing YTD performance to 0.53% versus the Index return of 3.83% for the same period.
The divergence of equity performance between the U.S. and the rest of the world increased throughout the third quarter. Performance in the U.S. continued to be led by strong returns from a handful of very large technology stocks. Foreign stocks were roiled by multiple factors, including turmoil in emerging markets, trade tensions, and an appreciating U.S. dollar. During our Semi-Annual Update call held on September 20, Charles de Vaulx (Trades, Portfolio) and Chuck de Lardemelle discussed in detail the various dynamics that have shaped recent global market performance. A full transcript of the call can be found on our website.
Our equities were up 4.0% for the quarter. By country, the United States was the top contributor, adding 1.9%, led by a few top 10 names, including: Acuity Brands, Inc. (AYI, Financial) (Industrials), Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) (Holding Company), Oracle Corporation (ORCL, Financial) (Technology) and Mastercard Incorporated (Technology). Japan and the Netherlands each contributed 0.2%. The U.K. and France each detracted -0.2%. China and South Africa detracted a total of -0.1%. By sector, Industrials (0.8%), Technology (0.6%) and Holding Company (0.6%) contributed the most to return, led by our names in the United States. Energy and Consumer Discretionary each detracted -0.2% and Materials detracted -0.1%.
Fixed income contributed 0.1% to performance and ended the quarter at 2.2%. Our currency hedges also contributed 0.1% and were relatively unchanged this quarter. As of September 30, 2018 they were: 39% Australian dollar; 10% euro; 25% Japanese yen; 30% Korean won.
Gold was down -4.9%, detracting -0.3%. Gold came down as the U.S. dollar appreciated and real rates began to go up. Exposure in the Fund decreased from 5.5% to 5.3% over the quarter.
We were net buyers in the Fund this quarter. We found a new name in Uruguay and added to some existing positions as volatility widened the discounts between share prices and our intrinsic value estimates. At the same time, we trimmed and eliminated positions that have done well for us as discounts narrowed. Equity exposure increased from 54.6% to 56.4% and cash decreased from 37.7% to 36.1%.
We will continue to focus on valuations and take advantage of market volatility as we attempt to preserve your capital and deliver respectable positive absolute returns.
We appreciate your confidence and thank you for your support.
