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CONTRIBUTORS

Mandana Hormozi

Portfolio Manager, Research Analyst
Franklin Mutual Series

Catalysts for opportunity in international stocks

In this video, Mandana Hormozi from Franklin Mutual Series believes it’s time to go international for value as secular shifts in Europe and Japan and compelling valuations set the stage for international stocks.

  • International stocks’ appealing valuations, rebounding economic activity and a greater focus on shareholder returns warrant more investor attention, according to Mutual Series.
  • We see Europe gaining momentum through monetary stimulus, especially in sectors like construction and real estate, and a long tail of fiscal stimulus, driven by greater defense and infrastructure spending.
  • Regulatory reform, consolidation and efforts to improve Eurozone competitiveness also lay the groundwork for stronger investor returns.
  • In Japan, the seeds laid by Prime Minister Abe a decade ago are coming to fruition. Corporate governance reform has introduced improvement in shareholder rights, better transparency, and stronger corporate boards.
  • The Tokyo Stock Exchange is pushing companies to improve investor returns through balance sheet efficiency, better returns on equity, and the unwinding of cross shareholdings. Meanwhile, the inflation’s return is fueling real wage growth, sparking a surge in business investment and increased R&D spending.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

The investment style may become out of favor, which may have a negative impact on performance.

Equity securities are subject to price fluctuation and possible loss of principal. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks. There can be no assurance that multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods.

Active management does not ensure gains or protect against market declines.

International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Investments in companies in a specific country or region may experience greater volatility than those that are more broadly diversified geographically.

Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks.

Investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. Low-rated, high-yield bonds are subject to greater price volatility, illiquidity and possibility of default.

Dividends may fluctuate and are not guaranteed, and a company may reduce or eliminate its dividend at any time.

WF: 6129267

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