Wasatch Global Value Fund (WILCX)  Invest in this Fund 

Investor Class | Institutional Class
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Global Stocks Moved Lower on Interest-Rate, Trade and Growth Concerns
by David Powers, CFA, CAIA, CPA

“A recession does not appear imminent and stocks may be somewhat oversold after the fourth quarter’s decline. We’re seeking to take advantage of lowered expectations and valuations to incrementally add to some of our positions. We’re also looking for attractive new opportunities for the Fund.”

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Performance for the Institutional Class prior to 1/31/2012 is based on the performance of the Investor Class.  Performance of the Fund's Institutional Class prior to 1/31/2012 uses the actual expenses of the Fund's Investor Class without any adjustments. For any such period of time, the performance of the Fund's Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund's Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.

As of 10/31/17, the Wasatch Large Cap Value Fund changed its name to the Wasatch Global Value Fund. Prior to 10/31/17, the Fund's primary benchmark was the Russell 1000 Value Index.

Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.
Investments in value stocks can perform differently from other types of stocks and from the market as a whole and can continue to be undervalued by the market for long periods of time. Loss of principal is a risk of investing.
Commentary based on Investor Share Class as of 12/31/2018

For the period ended December 31, 2018, the average annual total returns of the Wasatch Large Cap Value Fund-Investor Class for the one-, five- and ten-year periods were -5.52%, 4.68% and 8.78%, the returns for the MSCI ACWI were -9.42%, 4.26%, and 9.46%.  Expense ratio: Gross 1.19% / Net 1.11%. 


Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the data quoted. To obtain the most recent month-end performance data available, please click on the “Performance” tab of the individual fund under the “Our Funds” section. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Wasatch Funds are subject to risks, including loss of principal.


The Wasatch Global Value Fund—Investor Class declined -10.43% in the fourth quarter of 2018, outperforming the MSCI All Country World Index (ACWI), which fell -12.75%. The Fund also finished slightly better than the MSCI AC World Value Index, which was down -10.60%.

Large-cap U.S. equities lost -13.52% in the fourth quarter of 2018 as measured by the S&P 500® Index, compared to -12.54% for large- and mid-cap international equities as gauged by the MSCI EAFE Index. While overseas markets, especially emerging markets, had been trending lower for much of 2018, developed-market stocks launched upon a downward leg in October, in large part on concerns that the U.S. Federal Reserve (Fed) was contemplating a more aggressive tightening path in 2019. As the quarter progressed, uncertainty around U.S. trade policy, stalled negotiations around the United Kingdom’s exit from the European Union and mounting evidence of slowing economic growth in many parts of the world weighed on investor sentiment.

Against this backdrop, more defensive areas of the market outperformed. In the benchmark MSCI ACWI, the utilities sector was essentially flat while real-estate and consumer-staples stocks managed to hold losses to the single digits. The energy, information-technology and industrials sectors were the Index’s biggest laggards. For the Fund, positive returns in the consumer-discretionary and utilities sectors, the overall outperformance of our holdings, and an underweight position in information technology helped performance relative to the benchmark. The weakest-performing sectors in the Fund were energy and financials. As a group, our international companies were down but held up better than their U.S. counterparts.

Details of the Quarter

Leading individual contributors to the Fund’s performance relative to the benchmark in the quarter included Exelon Corp. (EXC). Exelon is the largest U.S. regulated utility holding company and operator of nuclear power plants. Within the regulated portion of its business, the company operates utilities in six states and has been successful in improving return on equity after acquisitions. As noted, utilities were favored in the quarter for their generally defensive nature and Exelon shares outperformed within the sector as investors rewarded the company’s substantial and reliable cash flow.

The Fund’s largest position, China Mobile Ltd. was another relative contributor in the quarter as the company’s share price declined less than the overall benchmark. China’s largest telecommunication-services provider, China Mobile has an exceptionally strong balance sheet featuring a large amount of cash and virtually no debt. Viewed as being a defensive holding within a defensive sector, China Mobile shares declined only modestly in the quarter despite reporting slightly soft third-quarter results.

A position in Germany’s Muenchener Rueckversicherungs-Gesellschaft AG (Munich Re) also added to relative performance. Although the company’s share price declined slightly, it performed better than the benchmark as a whole. One of the world’s largest property and casualty (P&C) reinsurers, Munich Re occupies a relatively stable space within the financials sector. In simple terms, Munich Re and other reinsurers help companies underwriting P&C policies mitigate the impact of large claims by assuming some of the risk of loss in exchange for a portion of the premiums earned. As compared to the banking and life insurance industries, the P&C and reinsurance segments are less impacted by the economic cycle or financial market volatility. Munich Re has a strong capital position and reported earnings slightly above expectations.

Significant detractors in the quarter included Citigroup, Inc. (C). While Citi has displayed strong earnings results driven by rising revenues and declining expenses, none of that mattered in the quarter. The outlook for bank profits has been dimmed by a flat yield curve, which pressures bank net interest margins. Citi experienced a share-price decline far in excess of that for the broader banking segment, as fears of a global economic slowdown weighed heavily on sentiment with respect to the most globally leveraged large bank. We think the selloff was overdone, and we maintained our position.

Within energy, Canada-based exploration and production company Suncor Energy Inc. (SU) was a notable detractor. Suncor specializes in the development of oil sands to produce bitumen (asphalt), which can be marketed for use in paving and roofing or refined into higher-value synthetic crude oil or diesel fuel. Suncor’s shares suffered as the price of oil plummeted from well over $70 to well under $50 a barrel. The oil-price drop was attributable to supply factors as U.S. restrictions on Iranian oil sales turned out to be overstated. Saudi Arabia increased production to compensate, and other countries were granted waivers from the Iranian restrictions. The Iranian affair exacerbated overall negative sentiment around commodities driven by global slowdown fears. Suncor is ending an investment cycle, and we expect the company’s cash-flow generation to support favorable capital-allocation measures going forward.

Within industrials, a position in Eaton Corp. plc (ETN) weighed on Fund performance. The company engineers and manufactures electrical and industrial systems and components for the vehicle, construction, commercial and aerospace markets. Eaton’s results tend to be highly cyclical. The combination of concerns that the global economic cycle may have peaked and somewhat softer 2019 earnings guidance led the company’s share price lower. Uncertainty around global trade also hung over the stock, although we view Eaton’s efficiency measures as having largely insulated the company’s input costs from adverse impact. (Current and future holdings are subject to risk.)


Global central bank stimulus is rolling off, led by the Fed—which has been raising interest rates now for two years. The European Central Bank has ended its bond-purchase program, and policy makers in Japan are acknowledging that the Bank of Japan’s negative interest rate policy cannot remain in place indefinitely without leading to unwanted distortions. This gear shifting is taking place even as the global economy is flashing signs of slowing growth and the U.S.-China trade dispute threatens to hamstring economic activity.

That said, a recession does not appear imminent and stocks may be somewhat oversold after the fourth quarter’s decline. We’re seeking to take advantage of lowered expectations and valuations to incrementally add to some of our positions. We’re also looking for attractive new opportunities for the Fund.

Overall, we continue to prefer a defensive-minded approach that we expect to continue to be beneficial as late-cycle dynamics gain additional traction. The Fund remains tilted toward higher-quality companies within the large-cap value universe, as gauged by lower market sensitivity, lower valuations, higher cash flows, higher dividends and stronger balance sheets. In terms of sectors, we remain overweight in energy, which tends to outperform late in an economic cycle, as well as in the defensive utilities sector. The Fund remains underweight in the economically sensitive consumer-discretionary, materials and industrials sectors.

Thank you for the opportunity to manage your assets.


David Powers



**The MSCI ACWI (All Country World Index) captures large and mid cap representation across 23 developed market and 24 emerging market countries. With 2,499 constituents, the Index covers approximately 85% of the global investable equity opportunity set. You cannot invest in this or any index.

Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indexes. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties or originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)

The Russell 1000 Value Index measures the performance of Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 Index measures the performance of the largest 1,000 companies in the Russell 3000 Index. The Russell 3000 Index is an unmanaged total return index of the largest 3,000 U.S. companies based on total market capitalization. You cannot invest in this or any index.

The Wasatch Global Value Fund has been developed solely by Wasatch Advisors, Inc. The Wasatch Global Value Fund is not in any way connected to or sponsored, endorsed, sold or promoted by the London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). FTSE Russell is a trading name of certain of the LSE Group companies.

All rights in the Russell 1000 Value Index vest in the relevant LSE Group company, which owns the Index. Russell ® is a trademark of the relevant LSE Group company and is used by any other LSE Group company under license.

The Index is calculated by or on behalf of FTSE International Limited or its affiliate, agent or partner. The LSE Group does not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Index or (b) investment in or operation of the Wasatch Global Value Fund or the suitability of the Index for the purpose to which it is being put by Wasatch Advisors, Inc.

CFA® is a trademark owned by CFA Institute.

The Wasatch Global Value Fund’s investment objectives are to seek capital appreciation and income.

The MSCI ACWI Value Index captures large and mid cap securities exhibiting overall value style characteristics across 23 developed-markets countries and 24 emerging-market countries. You cannot invest directly in this or any index.

The MSCI EAFE Index is an equity index that captures large- and mid-cap representation across 21 developed-market countries around the world, excluding the United States and Canada. You cannot invest directly in this or any index.

Net interest margin is typically used for a bank or an investment firm that invests depositors’ money, allowing for an interest margin between what is paid to the bank’s client and what is made from the borrower of the funds. A positive net interest margin indicates that an entity has invested its funds efficiently, while a negative net interest margin implies that the funds have not been invested efficiently.

Return on equity (ROE) measures a company’s efficiency at generating profits from shareholders’ equity.

The S&P 500 Index includes 500 of the United States’ largest stocks from a broad variety of industries. The Index is unmanaged and is a commonly used measure of common stock total return performance. You cannot invest directly in this or any index.

Valuation is the process of determining the current worth of an asset or company.

The yield curve is a line on a graph that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve compares three-month, two-year, five-year and 30-year U.S. Treasury securities. This yield curve is used as a benchmark for other interest rates, such as mortgage rates or bank lending rates. The curve is also used to predict changes in economic output and growth.

The MSCI ACWI is a broad-based market index that captures large and mid-cap representation across 23 developed markets and 24 emerging markets countries.  The Index commenced operations on 01/01/2001, after the Fund commenced operations.  MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products.

  The Russell 1000 Value Index measures the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values.  Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. 

You cannot invest directly in indexes.

View the Global Value Fund’s most current Top 10 Holdings

Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor.

Read our Holdings Release Policy and why we have one.

CFA® is a trademark owned by CFA Institute.