Wasatch Global Value Fund (WILCX)  Invest in this Fund 

Investor Class | Institutional Class
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Central-Bank Accommodation and Easing Trade Tensions Supported the Rally in Equities
by David Powers, CFA, CAIA, CPA

“With the stocks of growth companies trading at significant premiums as investors anticipate the end of the current cycle, value stocks appear attractive on a relative basis.”

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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.

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 03/31/2019

For the period ended March 31, 2019, the average annual total returns of the Wasatch Global Value Fund-Investor Class for the one-, five- and ten-year periods were 5.33%, 6.35% and 10.99%, the returns for the MSCI ACWI were 2.60%, 6.45%, and 11.98%.  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 returned 9.64% in the first quarter of 2019, underperforming the benchmark MSCI ACWI (All Country World Index), which returned 12.18%. The Fund also modestly lagged the MSCI ACWI Value Index, which returned 9.12%.

Large-cap U.S. equities returned 13.65% in the quarter as measured by the S&P 500® Index, compared to 9.98% for large- and mid-cap international equities as gauged by the MSCI EAFE Index. The rally in global equities was largely driven by a shift on the part of major central banks in the direction of policy accommodation. After the rout in financial markets seen in the fourth quarter of 2018, the Federal Reserve (Fed) signaled a patient approach entering 2019 and eventually indicated it was likely to hold rates steady through year-end. The European Central Bank and the People’s Bank of China also moved toward more-stimulative stances. Taken together with indications of progress toward resolving the U.S.-China trade dispute, the tenor of central-bank communications outweighed concerns about slowing global economic growth and led to a rebound in risk sentiment among investors.

Within the global equity universe, performance was led for the quarter by the information-technology, real-estate and energy sectors, while health care and financials were underperforming sectors. Contributions to performance for the Fund were led by positioning with respect to energy, real estate and materials. While information-technology holdings contributed the most to the Fund’s return, our underweight position in the sector detracted from performance relative to the Index. Stock selection in consumer discretionary also weighed on relative results.

Geographically, holdings in the United States, the United Kingdom and Switzerland added the most to the Fund’s return. Relative to the benchmark, the United Kingdom and Switzerland were strong contributors, while the U.S., China and Japan detracted from relative performance. We finished the quarter with a little over half of the Fund’s weighting in the U.S. and the remainder spread across 13 other countries. This means that, outside of the U.S., our typical country weight is small and driven predominantly by company- and sector-specific factors as opposed to us trying to manage the Fund’s exposure to specific countries.

Details of the Quarter

Specialty REIT EPR Properties (EPR) was the top contributor to Fund performance in the first quarter. EPR owns a range of recreational and entertainment properties including megaplex theaters, amusement parks and ski areas, as well as educational properties leased by charter schools, private schools and early-education providers. With a dividend of nearly 6%, EPR’s shares benefited in the quarter along with the larger REIT segment as interest rates declined and the Fed signaled a halt to hikes in its benchmark rate. In addition, issues around a delinquent educational tenant that leases a number of EPR properties continued to move toward resolution.

Technology company Cisco Systems, Inc. (CSCO) was the second-best contributor. Cisco has recently begun to reap the benefits of an investment cycle, seeing a notable increase in recurring revenue as it moves from selling hardware and networking services to a subscription-based business model. The company reported strong results across all sectors and geographies and raised guidance in the quarter. The stock has also been supported post-tax reform by a stepped-up share-buyback program.

Within energy, exploration and production company Suncor Energy, Inc. (SU) was a notable contributor. 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 shares benefited in the quarter as the price of oil rose more than 25%, supported by OPEC production cuts. Sentiment with respect to Suncor’s stock was also boosted by share buybacks and an above-expectations dividend hike.

On the downside, our large position in CVS Health Corp. (CVS) weighed heavily on the Fund’s performance. CVS issued disappointing forward guidance with respect to both its retail drugstore and pharmacy benefit management (PBM) businesses. More broadly, sentiment with respect to CVS continued to be dampened by concerns over the pricing environment for PBMs, as proposals move forward to eliminate rebates paid by drug companies and political rhetoric around lowering drug prices escalates. An earnings disappointment by competitor Walgreens did nothing to boost optimism for CVS stock.  The company’s cash flow and dividend remain attractive, and we believe CVS is well-positioned for the long term given its many consumer touchpoints. However, given the complexity in valuing the stock, we trimmed the position in the quarter.

Taiwan financial-services company Fubon Financial Holding Co. Ltd. was the second-largest detractor. In addition to its principal life-insurance arm, Fubon has a significant banking and investment business, which posted poor results in the wake of the equity-market decline seen in the fourth quarter of 2018. The unit was also negatively impacted by currency-hedging costs and exchange-rate losses. We continue to view Fubon as an excellent way to gain exposure to Asia’s developing middle class.

An overweight position in Japan Airlines Co. Ltd. detracted from relative performance in the quarter as rising fuel costs impacted sentiment around the broader airline segment. In addition, investors have been uncertain about the outlook for share buybacks, driven in part by concerns that the airline may be poised to make a significant expenditure on international airport slots in the run-up to the 2020 Olympics in Tokyo. We view any such investment as likely to benefit the long-term outlook for Japan Airlines and have maintained the position. (Current and future holdings are subject to risk.)


The rebound in global equities seen in early 2019 reflected the perception of investors that the risks to corporate-earnings growth had been reduced given the signals of monetary support from major central banks, a somewhat better outlook for U.S.-China trade relations and large-scale stimulus being injected into China’s economy. At current levels, stock prices appear to be quite vulnerable to any signs of a softening in earnings. With the stocks of growth companies trading at significant premiums as investors anticipate the end of the current cycle, value stocks appear attractive on a relative basis.

We continue to prefer a defensive-minded approach that we expect to be beneficial as late-cycle dynamics gain additional traction. The Fund remains tilted toward higher-quality companies within the global 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 the cycle, as well as in the defensive utilities sector. The Fund remains underweight in the cyclically sensitive information-technology, consumer-discretionary and materials 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 2,771 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 Wasatch Global Value Fund’s investment objectives are to seek capital appreciation and income.

Earnings growth is a measure of growth in a company’s net income over a specific period, often one year.

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.

OPEC is an acronym for the Organization of Petroleum Exporting Countries. OPEC was founded in 1960. It is a collective of countries that export large amounts of petroleum and was formed to establish oil-exporting policies and set prices.

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 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.

  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.

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