International stocks, often overlooked by U.S. investors, have soared this year. And our global fund has benefited.

 

July

Year to Date

Since Inception (Annualized) Inception Date: 6/6/2009

Motley Fool Independence Fund (FOOLX)

2.35%

21.09%

12.82%

FTSE Global All Cap Index

2.66%

14.67%

11.65%

For a standardized list of performance for the Independence Fund, please click here. For fund holdings, please click here.

July was another very good month for the Independence Fund. Year to date, and since inception, the fund is beating its benchmark.

You probably hear lots of chatter about U.S. markets at all-time-highs. And for good reason, since the S&P 500 is up more than 10% through the first seven months of the year. But you probably don’t hear that foreign markets have nearly doubled that return, rising close to 18%. While many investors keep a narrow focus on their home markets and are underinvested in the rest of the world, the Independence Fund helps guard against home-country bias by maintaining a 50/50 split between domestic and foreign companies. Our strategy is paying off: The performance of our foreign holdings roughly doubled our U.S. holdings during the month. Eight of our top 10 performers were foreign companies, the standout being U.K.-based Horizon Discovery, which increased more than 25%.

Biotech companies are dedicating massive resources to gene-specific drug development, because the potential benefits of targeted therapies appear to be off the charts. Horizon Discovery works in this area, manufacturing cells with various mutations for researchers to test their compounds on. A first mover and a leader in its field, Horizon is building up a catalog of unmatched, high-quality cell variations, which is critical to ensuring test fidelity. This is a young company and not yet profitable, but it continues to execute on its business strategy, and attention from the investing community is on the rise. We’ve studied Sigma Aldrich and BioTechne, two companies whose evolution is similar to that of Horizon, and we think Horizon has the leadership and business quality to succeed in similar ways to those companies.

The worst performer for the month was Almarai, down 18%. This diversified food company, which sells across the Middle East, has seen its shares rise 15% year to date, but the July dip came after a lackluster earnings report. Dairy and juice, the company’s largest segment, has had several poor quarters because of rising input costs and unfavorable currency moves. We like the company’s scale-based advantages and reinvestment opportunities but acknowledge that input-cost variability and inconsistent end-market health detract from the quality of the business. After this pullback, we believe shares offer a balanced risk-reward profile.

We didn’t make any new investments during the month and sold only one holding. Pipeline operator Kinder Morgan provided clarity on its capital-allocation plans for the next few years, including a growing dividend and potential share buybacks, after strengthening its balance sheet with proceeds from a spinoff of some Canadian assets. With that development, our thesis on Kinder Morgan has largely played out. What remains is progress on the Trans Mountain Pipeline project, which we think has considerable risk of disruption. We sold our shares to raise cash for better opportunities.

We enjoy sharing these updates with you each month, and we’re happy with the fund’s recent performance, but we always urge you to consider your investing performance over longer periods. By investing in this fund, you own pieces of businesses that are engaged in building franchises that intend to create lasting value for the world. Our assessment of the investment opportunities that ride on these efforts is appropriately long term, and we hope your commitment is similar. Remember that time is the ally of a good business, and the Independence Fund is a collection of 49 good businesses spread across the globe. Time is on our side.

 

Lastest Insights