and Forms

literature and forms

White Papers

Read the latest white papers from Wasatch Funds here. Click to view the PDF document.

Large Cap Value Fund

For David Powers, the new Lead Portfolio Manager of the Wasatch Large Cap Value Fund (FMIEX), value investing is a natural extension of his contrarian world view and his accounting background.  The process that underpins Dave’s approach to value investing stands in sharp contrast to that of many growth investors, who typically purchase companies experiencing success that’s already reflected in the stock price.  Hopefully, such success will continue.  So for growth investors, the key question is often, “What could go wrong that would derail the success?”  For Dave, who frequently invests in companies that have fallen out of favor, the question is, “What could go right that other investors are not anticipating?”  As a value investor, he is looking for companies trading below their intrinsic worth that other investors have ignored, and that he believes have significant opportunities for improvement yet to be recognized in the marketplace.  This paper discusses the details of Dave’s investment process.

Wasatch Fund Highlighted:  Wasatch Large Cap Value Fund (FMIEX)

Long/Short Fund: Seeking Equity-Like Returns with Less Volatility and Risk

Alternative investments have been gaining favor over the past several years as investors seek to increase portfolio diversification and reduce overall volatility.  While traditional investments such as stocks, bonds and money market securities have long been accessible to all investors through mutual funds, alternative strategies had been accessible mainly to institutions and wealthy individuals through hedge funds and limited partnerships.  “Alternative” strategies include those that employ short-selling or arbitrage and those investing in commodities, currencies or futures.  Today, these alternative investment strategies are also available through mutual funds, providing shareholders with more transparency, smaller minimum purchases, lower fees and daily liquidity.  This paper discusses the Wasatch Long/Short Fund (FMLSX), which is an alternative investment that uses short-selling to seek a different source of returns and reduce volatility.

Wasatch Fund Highlighted:  Wasatch Long/Short Fund (FMLSX)

World Innovators Fund: Finding the World’s Innovative Companies

Innovation is the force that sustains economic growth, said economist Joseph Schumpeter.  In his 1943 book Capitalism, Socialism and Democracy, Schumpeter developed and popularized the concept of “creative destruction,” the process through which existing economic order is disrupted to clear the way for future growth.  “The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates,” Schumpeter wrote.  “This process of Creative Destruction is the essential fact about capitalism.  It is what capitalism consists in and what every capitalist concern has got to live in.”  This paper discusses the Wasatch World Innovators Fund’s search for companies that are engaged in and benefiting from the process of creative destruction, no matter what form it takes.

Wasatch Fund Highlighted:  Wasatch World Innovators Fund (WAGTX)

Global Opportunities Fund: Investing in Wasatch’s Best Ideas From Around the Globe

Despite offering the potential for attractive returns and diversification (which could reduce overall portfolio volatility), global small/micro-cap investing is often overlooked by both institutions and individuals.  The sheer number of small- and micro-cap companies — greater than 7,000 in the U.S. and abroad — versus the paucity of analysts who follow them makes it difficult to identify some of the best prospects.  Relatively few portfolio managers have the resources necessary to consistently uncover compelling investments in this space.  For those with access to substantial worldwide research capabilities, however, there are opportunities to find reasonably priced small- and micro-cap companies with significant growth potential before they are widely recognized in the marketplace.  This paper discusses the Global Opportunities Fund, which can be described as “The Best of Wasatch.”

Wasatch Fund Highlighted:  Wasatch Global Opportunities Fund (WAGOX)


Africa: A Bright Outlook for the Dark Continent

In his book Through the Dark Continent, journalist and explorer Henry Morton Stanley was among the first to designate Africa “The Dark Continent.” This romantic name reflected the fact that, despite its proximity to Europe, Africa was a largely unknown and mysterious area of the world to 19th-century Europeans. Perceptions of Africa as a backward, undeveloped land of harsh terrain and dim prospects have been slow to change. The truth is that Africa has made significant advancements in recent years, and each incremental improvement unlocks the potential for future improvement. In stark contrast to the notion of a dark continent, Africa today is home to millions of bright, motivated people whose primary goal is to seek better lives for themselves and their families. This paper discusses why outdated attitudes and perceptions about Africa have created what we believe are significant opportunities for investors willing to roll up their sleeves and put boots on the ground.

Wasatch Funds Highlighted:  Wasatch Frontier Emerging Small Countries Fund (WAFMX)Wasatch Emerging Markets Select Fund (WAESX) ; Wasatch International Opportunities Fund (WAIOX)


Micro Cap Value Fund: Exploiting Market Inefficiencies

With principal offices in Texas, First Cash Financial operates over 275 pawn shops in 12 states and 550 more in Mexico.  Based in Israel, Caesarstone is a leading manufacturer and distributor of quartz countertops for kitchens.  Headquartered in San Diego, BofI Holding (Bank of Internet) is an online-only bank with nearly $3billion in assets.  None of these companies is a household name.  And all of them are often overlooked by investors and research analysts.  They are typical, however, of the investments in the Wasatch Micro Cap Value Fund (WAMVX) managed by Brian Bythrow.  Under his direction, the Fund invests primarily in value companies with market capitalizations of less than $1 billion.  This paper discusses Brian’s purchase and sell disciplines, along with his approach to risk-management.

Wasatch Fund Highlighted:  Wasatch Micro Cap Value Fund (WAMVX)

Frontier Emerging Small Countries Fund: Trekking Across the Frontier for High-Quality Growth Companies

We believe frontier markets are in the early stages of a potentially long-term investment cycle.  Frontier countries currently account for 21.6% of the world’s population, 6% of its nominal gross domestic product (GDP), and only 3.1% of world market capitalization.  Large, young populations are driving urbanization and a growing middle class.  Meanwhile, as burdensome regulations and taxation within the developed world continue to escalate, there is every reason to believe outsourcing and globalization trends will continue to create jobs and drive growth toward frontier markets.  This paper discusses how the Wasatch Frontier Emerging Small Countries Fund ventures the furthest afield of all Wasatch funds by targeting frontier markets and emerging small countries.

Wasatch Funds Highlighted:  Wasatch Frontier Emerging Small Countries Fund 

Emerging Markets Select Fund: A Different Approach to Investing in Emerging Markets

The typical emerging markets investment approach often focuses on larger countries, large-cap and mega-cap companies, global cyclicals, exporters to developed countries, and passive management (index products).  This paper discusses how the Wasatch Emerging Markets Select Fund takes a different approach.

Wasatch Funds Highlighted:  Wasatch Emerging Markets Select Fund

Emerging Markets Small Cap Fund: Targeting High-Quality Small-Cap Growth Companies in Emerging Markets

Traditional emerging-markets equity portfolios often are skewed toward countries and companies with large market capitalizations.  For example, 57% of the MSCI Emerging Markets Index is represented by its four most heavily weighted countries — China, Korea, Brazil and Taiwan.  While there is nothing inherently wrong with investing in larger, more-established markets and businesses, the largest companies in emerging markets tend to be exporters of products to the developed world.  The equity securities of such companies can behave more like developed-country investments and may provide little exposure to the home countries.  Moreover, we believe the “large versus small” decision should be driven by the relative attractiveness of investment opportunities — not by popularity or convenience.  This paper discusses the Wasatch Emerging Markets Small Cap Fund’s approach to the emerging-markets universe.

Wasatch Funds Highlighted:  Wasatch Emerging Markets Small Cap Fund 

Frontier Markets and Emerging Small Countries: Elements of an Emerging Asset Class

In this white paper, Wasatch discusses the relatively new investment opportunity presented by frontier and emerging small country markets.  These “new emerging markets” include countries with large populations, favorable demographics, and a growing middle class.  Wasatch examines some of the favorable trends and historical patterns that form the basis for investing in these markets and builds the case as to why interested investors should consider employing an active portfolio manager that uses a bottom-up, hands-on approach for finding quality growth companies in these countries. 

Wasatch Funds Highlighted: Wasatch Frontier Emerging Small Countries Fund