The Calamos family of mutual funds has enjoyed a respectable level of success over the past few years. The Fund family began operating over 30 years ago under John Calamos, Sr. and has evolved from an investment advisory firm into a diversified group that offers a variety of investment vehicles. One of the standout offerings is the Global Equity Fund (CAGEX).
The Global Equity Fund’s management team, John Calamos, Sr. and nephew Nick Calamos, have noted that when selecting investments they focus on a company's earnings growth potential, financial strength and stability. The team will also consider the value of a stock relative to the issuer's worth, while attempting to identify any potential near-term catalysts that could trigger an increase in the stock's price. Once they have established that these factors make the equity appealing, the team will assess the issuer's potential financial soundness, earnings and cash flow growth over the longer term. The quality of the issuing firm’s management is also an important aspect of the process. From a broader standpoint, the team typically applies macro-level themes and top-down diversification methods, by industry and company type, in an effort to lower the risk ratio of the portfolio.
The Fund itself is a diversified portfolio with a long-term capital appreciation objective that currently has a large-cap growth, technology tilt. The management team has noted that the allocation has favored issues within the information-technology arena because these stocks have added the most value during recent quarters, with semiconductor and IT services holdings posting notable gains versus the MSCI World Index, to which the Fund is benchmarked. In addition, management states that these companies currently boast higher relative cash levels, lower debt and attractive valuations, when compared to the broader market.
From a historical standpoint, according to the Value Line Mutual Fund analyzer, the Fund was one of the top-10 performers in 2010 (as of August 31st) and has handily outperformed its relative indices and objective group over the six-month, one-year, and three-year periods. Indeed, the growth persistence ranking is above average and is well ahead of the objective group. The Fund may invest up to 100% of its assets in the securities of foreign issuers. As a result, at times the potential for political or economic instability in foreign countries can generate a higher level of risk, including fluctuations in currency exchange rates, increased price volatility, and difficulty obtaining information. CAGEX’s exposure to global growth markets generates some moderate risk, but the performance results warrant a certain degree of risk tolerance. The aforementioned factors aside, the fund’s overall investment strategy can include anything from small-cap to emerging markets and even traditional value plays. The Fund may also seek to purchase index put options to help reduce downside potential. In fact, the Fund’s most recent commentary indicated that the portfolio’s put position helped to mitigate some of the unfavorable market moves related to subdued worldwide economic growth of late.
The Fund’s largest geographic concentration of assets is currently in the European region with sizeable stakes in U.K.-based tech outfits, Arm Holdings and Autonomy Corp., as well as Swiss medical services provider Alcon, Inc. (ACL) and Danish healthcare giant Novo Nordisk (NVO). On the other hand, one of the often appealing characteristics of funds in the global equity spectrum is the ability to invest in U.S. companies as well. This factor makes this fund a more attractive option for investors that are seeking solid total returns via international exposure but are leery of the risks associated with a completely international allocation.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.