Global Real Assets Strategy

Seeks to deliver attractive real returns while avoiding the permanent impairment of capital over time by using a value investing approach in global equity markets.

Investment Philosophy

  • We believe that the market episodically fails to recognize, in our view, a company’s “intrinsic value.” We selectively invest when price presents what we believe to be an appropriate “margin of safety.”
  • We seek persistent businesses that embody asset scarcity, strong capital structures and corporate resilience.
  • Our fundamental, bottom-up approach requires a temperament focused on: patience, humility and flexibility.

 

Strategy Highlights

  • Down side mitigation icon

    Diversified Liquid Real Asset Investment

    Global equity strategy investing in companies that participate in the "real economy" complemented by traditional stores of value such as gold bullion and inflation-linked bonds

  • 08 flexible

    Durable Global Equity Portfolio

    Philosophically consistent with the First Eagle’s Global Value team’s well-established approach to selectively investing in resilient, durable companies based on intensive bottom-up, fundamental research.

  • Affiliation icon

    Distinct First Eagle Approach

    Philosophically consistent with the First Eagle’s Global Value team’s well-established approach to selectively investing in resilient, durable companies based on intensive bottom-up, fundamental research.

Our Process

We identify companies for consideration when they exhibit specific characteristics such as: Scarcity. Durability. Persistence.

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Our highly selective approach is focused on finding quality companies and then patiently waiting for that company to trade at what we view as an attractive price.

  1. Risk Disclosures

  2. The First Eagle Global Real Assets Strategy ("The Strategy") is new and may not be successful under all future market conditions. The Strategy may not attract sufficient assets to achieve investment, trading or other efficiencies.

    The value and liquidity of portfolio holdings may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the United States or abroad. During periods of market volatility, the value of individual securities and other investments at times may decline significantly and rapidly.

    The Strategy will invest in companies operating in various industries related to real assets. To the extent there is a downturn in one or more of these industries, there would be a larger impact on the Strategy than if the Strategy’s portfolio were more broadly diversified. Factors that may affect these industries include, but are not limited to, government regulation or deregulation, energy conservation and supply/demand, raw material prices, commodities regulation, cost of transport, cost of labor, interest rates, and broad economic developments such as growth or contraction in different markets, currency valuation changes and central bank movements.

    The Strategy may invest in securities of companies that focus on real estate related activities. Real estate and its related businesses are highly dependent on market conditions, including interest rates. REITs are subject special risks including the quality and skill of REIT management and the internal expenses of the REIT. Many types of businesses are significant owners and operators of real estate and can be directly or in directly exposed to similar risks in addition to their own more sector-specific risks. Real estate income and values may be negatively affected by general and local economic developments such as extended vacancies of properties, as well as demographic trends, such as population movement or changing tastes and values. Real estate income and values also may be negatively affected by condemnations, tax law changes, zoning law changes, regulatory limits on rent, environmental regulations and the availability of mortgage financing and changes in interest rates.

    The Strategy may invest in energy companies, which may be negatively affected by natural disasters, the high investment costs of exploration and other long-term projects, maintenance costs (and risks of obsolescence) associated with significant fixed assets, commodity prices, government regulations, and conservation efforts, among other factors.

    There are risks associated with investing in foreign investments (including depositary receipts). Foreign investments, which can be denominated in foreign currencies, are susceptible to less politically, economically and socially stable environments, fluctuations in the value of foreign currency and exchange rates, and adverse changes to government regulations.

    Investment in gold and gold related investments present certain risks, and returns on gold related investments have traditionally been more volatile than investments in broader equity or debt markets.

    A principal risk of investing in value stocks is that the price of the security may not approach its anticipated value or may decline in value. “Value” investments, as a category, or entire industries or sectors associated with such investments, may lose favor with investors as compared to those that are more “growth” oriented.

    All investments involve the risk of loss of principal.

    Although the Global Real Assets Strategy is intended to provide a measure of protection against inflation, it is possible it will not do so to the extent intended. The Strategy’s investments may be adversely affected to a greater extent than other investments during periods of deflation.

  3. Disclosures

  4. These are not investment guidelines or restrictions and will be subject to change. Actual portfolio will differ.

  5. FEF Distributors, LLC (Member SIPC) distributes certain First Eagle products; it does not provide services to investors. As such, when FEF Distributors, LLC presents a strategy or product to an investor, FEF Distributors, LLC  does not determine whether the investment is in the best interests of, or is suitable for, the investor. Investors should exercise their own judgment and/or consult with a financial professional prior to investing in any First Eagle strategy or product.

  6. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

  7. Definitions

  8. “Intrinsic value” is based on our judgment of what a prudent and rational business buyer would pay in cash for all of the company in normal markets.

  9. First Eagle defines "margin of safety" as the difference between a company's market price and our estimate of its intrinsic value. An investment made with a margin of safety is no guarantee against loss.

  10. “Real Economy” is the part of a country's economy that produces goods and services, rather than the part that consists of financial services, such as banks or stock markets.

  11. Benchmark Definitions

  12. Indices are unmanaged and do not incur management fees or other operating expenses. One cannot invest directly in an index.

  13. MSCI World: The MSCI World Index is a widely followed, unmanaged group of stocks from 23 developed markets and is not available for purchase. The index provides total returns in U.S. dollars with net dividends reinvested.

  14. MSCI World Value: The MSCI World Value Index captures large and mid-cap securities exhibiting overall value style characteristics across 23 Developed Markets (DM) countries. The index provides total returns in US dollars with net dividends reinvested.

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  • Benjamin Bahr

    Portfolio Manager and Senior Research Analyst

    Industry start:  
    2005
    Year joined:  
    2015
  • John Masi

    Portfolio Manager and Senior Research Analyst

    Industry start:  
    2009
    Year joined:  
    2012
  • George Ross

    Portfolio Manager and Senior Research Analyst

    Industry start:  
    2002
    Year joined:  
    2003
  • David Wang

    Portfolio Manager and Senior Research Analyst

    Industry start:  
    2009
    Year joined:  
    2017

Our Process

The investment team follows a bottom-up, fundamental approach, focusing on companies with businesses which it believes both exhibit sustainable profitability and are trading at significant discounts to their “Intrinsic Values.” Selective Participation

  • 01

    Narrow the Universe

    The team seeks companies that produce, own or offer services related to real assets across a diverse set of industries. We begin with approximately 6,000 companies across the broad global equity universe, about half of which demonstrate the desired real asset characteristics and demand closer examination. This primarily comprises companies that: 

    • Directly own real assets 

    or 

    • Provide goods or services related to real assets  
  • 02

    Durability

    As with other strategies managed by the Global Value team, the Global Real Assets Strategy employs a rigorous bottom-up, fundamental research process.

    The team estimates the "intrinsic value" of businesses based on conservative assumptions, focusing on companies with scarce assets of meaningful or known duration. The team places great emphasis on:

    • Balance sheet valuation (such as enterprise value to asset-replacement value)
    • Cash-flow valuation (such as enterprise value to earnings before interest and taxes)

    The team scrutinizes businesses for the corporate governance and capital structure qualities that can help translate persistent earnings power into sustainable intrinsic value.

    Financial statements are recast to help uncover a company’s true earnings power using only demonstrated results.

  • 03

    Construct Portfolio

    A portfolio management team of real assets industry specialists helps optimize the selective investment in businesses when their market price offers a “margin of safety” to our estimate of intrinsic value.   

    • Typically holds 50–100 securities, with position sizing thoughtfully considered
    • Annual turnover expected to be 20–50%
    • May hold gold bullion and Treasury inflation-protected securities or inflation-linked bonds as stores of value
    • Risk management embedded throughout the investment process, from diversified portfolio construction and management to the selective hedging of currency exposures
  1. Not all companies held in this strategy will meet the criteria listed.

  1. Risk Disclosures

  2. The First Eagle Global Real Assets Strategy ("The Strategy") is new and may not be successful under all future market conditions. The Strategy may not attract sufficient assets to achieve investment, trading or other efficiencies.

    The value and liquidity of portfolio holdings may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the United States or abroad. During periods of market volatility, the value of individual securities and other investments at times may decline significantly and rapidly.

    The Strategy will invest in companies operating in various industries related to real assets. To the extent there is a downturn in one or more of these industries, there would be a larger impact on the Strategy than if the Strategy’s portfolio were more broadly diversified. Factors that may affect these industries include, but are not limited to, government regulation or deregulation, energy conservation and supply/demand, raw material prices, commodities regulation, cost of transport, cost of labor, interest rates, and broad economic developments such as growth or contraction in different markets, currency valuation changes and central bank movements.

    The Strategy may invest in securities of companies that focus on real estate related activities. Real estate and its related businesses are highly dependent on market conditions, including interest rates. REITs are subject special risks including the quality and skill of REIT management and the internal expenses of the REIT. Many types of businesses are significant owners and operators of real estate and can be directly or in directly exposed to similar risks in addition to their own more sector-specific risks. Real estate income and values may be negatively affected by general and local economic developments such as extended vacancies of properties, as well as demographic trends, such as population movement or changing tastes and values. Real estate income and values also may be negatively affected by condemnations, tax law changes, zoning law changes, regulatory limits on rent, environmental regulations and the availability of mortgage financing and changes in interest rates.

    The Strategy may invest in energy companies, which may be negatively affected by natural disasters, the high investment costs of exploration and other long-term projects, maintenance costs (and risks of obsolescence) associated with significant fixed assets, commodity prices, government regulations, and conservation efforts, among other factors.

    There are risks associated with investing in foreign investments (including depositary receipts). Foreign investments, which can be denominated in foreign currencies, are susceptible to less politically, economically and socially stable environments, fluctuations in the value of foreign currency and exchange rates, and adverse changes to government regulations.

    Investment in gold and gold related investments present certain risks, and returns on gold related investments have traditionally been more volatile than investments in broader equity or debt markets.

    A principal risk of investing in value stocks is that the price of the security may not approach its anticipated value or may decline in value. “Value” investments, as a category, or entire industries or sectors associated with such investments, may lose favor with investors as compared to those that are more “growth” oriented.

    All investments involve the risk of loss of principal.

    Although the Global Real Assets Strategy is intended to provide a measure of protection against inflation, it is possible it will not do so to the extent intended. The Strategy’s investments may be adversely affected to a greater extent than other investments during periods of deflation.

  3. Disclosures

  4. These are not investment guidelines or restrictions and will be subject to change. Actual portfolio will differ.

  5. FEF Distributors, LLC (Member SIPC) distributes certain First Eagle products; it does not provide services to investors. As such, when FEF Distributors, LLC presents a strategy or product to an investor, FEF Distributors, LLC  does not determine whether the investment is in the best interests of, or is suitable for, the investor. Investors should exercise their own judgment and/or consult with a financial professional prior to investing in any First Eagle strategy or product.

  6. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

  7. Definitions

  8. “Intrinsic value” is based on our judgment of what a prudent and rational business buyer would pay in cash for all of the company in normal markets.

  9. First Eagle defines "margin of safety" as the difference between a company's market price and our estimate of its intrinsic value. An investment made with a margin of safety is no guarantee against loss.

  10. “Real Economy” is the part of a country's economy that produces goods and services, rather than the part that consists of financial services, such as banks or stock markets.

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