International Value Advisers, LLC (“IVA” or the “Adviser”) is a registered investment adviser
founded in 2007. The operating partners of the firm are comprised of the following:
Mr. Charles de Vaulx- Chief Investment Officer and Portfolio Manager
Mr. Charles de Lardemelle- Portfolio Manager
Mr. Michael Malafronte- Managing Partner
Mr. Thibaut Pizenberg- Securities Analyst
Mr. Charles de Vaulx and Mr. Charles de Lardemelle are principal owners but no partner has
voting rights that exceed 25%.
IVA provides investment advisory services to separate accounts, U.S. registered mutual funds,
U.S. based private funds, Cayman-based mutual funds and a Luxembourg registered UCITS.
Separate account clients include institutions, pension and profit sharing plans, trusts, and
charitable organizations. We maintain two investment strategies, IVA Diversified Global
Strategy and IVA Diversified International Strategy.
Our two strategies operate by investing in a range of securities and asset classes from markets
around the world. Investments include equities, corporate debt, sovereign debt, U.S. government
securities, exchange traded funds, commercial paper, option contracts, futures contracts and gold
related investments. Although we try to accommodate investment restrictions that clients may
want to impose, we generally will not accept restrictions that would prevent us from
implementing our strategy.
We do not participate in wrap fee programs.
As of December 31, 2018, IVA managed a total of approximately $14,155,209,000 in assets, all
on a discretionary basis.
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In addition to the fees set out below, clients may incur custodian fees, transaction costs and
brokerage commissions, as well as other fees and taxes on brokerage accounts and securities
transaction. IVA’s brokerage practices are discussed in more detail in Item 12, Brokerage
Practices.
We do not recommend our mutual funds or private funds to separate account clients in order to
avoid creating a conflict of interest.
Separate Accounts
IVA charges an annual advisory fee consisting of a percentage of assets under management.
Fees are billed quarterly in arrears and computed according to the following schedule that is
negotiable:
0.85% on the first $250 million of assets managed; and
0.80% on the balance.
Fees are pro rated with respect to any capital contributions, withdrawals and any period that is
less than a full calendar quarter.
Private Funds
IVA manages IVA Global Fund (Delaware), L.P. and a Cayman-based master private fund, IVA
Overseas Master Fund, L.P. which has two feeder funds (collectively, the “Private Funds”). IVA
charges the Private Funds an annual advisory fee based on a percentage of assets under
management as outlined below:
Fund Name Fee Schedule
IVA Global Fund (Delaware), L.P. Class B - 0.90%,
Class C - 1.25%
IVA Overseas Fund (Delaware), L.P. Class A - 0.90%,
Class B - 1.25%
IVA Overseas Fund (Cayman), Ltd. Class A - 0.90%,
Class B - 1.25%
Fees are payable by the Private Funds to IVA monthly in advance. Due to monthly liquidity, no
refunds are required for payment of advisory fees in advance.
The manager may, in its sole discretion, reduce, waive or calculate differently the management
fee with respect to certain investors, including, without limitation, investors that are affiliates or
employees of IVA, members of the immediate families of such persons and trusts or other
entities for their benefit. The manager may rebate management fees to some investors.
IVA may share certain expenses with the Private Funds such as quotation and trading services.
In an attempt to be fair and equitable, these expenses are allocated pro rata based on assets.
Please see the Private Funds’ offering memoranda for more information related to fees and
expenses.
Registered Mutual Funds
IVA manages the IVA Worldwide Fund (the “Worldwide Fund”) and the IVA International
Fund (the “International Fund”) (collectively, the “Mutual Funds”). The Worldwide Fund and
the International Fund are each an investment portfolio of IVA Fiduciary Trust, an open-end
series management investment company registered under the Investment Company Act of 1940,
as amended. IVA charges the Mutual Funds an annual advisory fee of 0.90%. The fee is based
on average assets, accrued daily and payable monthly in arrears. There are other costs associated
with investing in mutual funds. For more information on fund expenses and other pertinent
information, please see the summary prospectus or prospectus of the respective fund.
Luxembourg Registered UCITS
IVA manages the IVA Global SICAV, an investment company registered in the Grand Duchy of
Luxembourg as an undertaking for investment in transferable securities. The fund has an annual
advisory fee of 1.25%. The fee is based on average assets, accrued daily and payable monthly.
The fund is only available to non- U.S. investors.
Other Compensation
A number of our employees are involved in soliciting investments in the mutual funds that we
manage. These employees do not distribute the funds to IVA clients, but rather act as
wholesalers to financial intermediaries, including brokers and investment advisers. The
wholesalers are registered representatives of an unaffiliated broker-dealer who acts as the
distributor of the mutual funds as described in Item 10, Other Financial Industry Activities
and Affiliations. They are compensated by the unaffiliated broker-dealer based on a percentage
of sales made and assets invested by investors in their designated territories.
We have determined that no conflict exists due to the fact that the wholesalers are not selling the
mutual funds to IVA clients but rather to other professionals who, in turn, are distributing the
mutual fund to their own clients.
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IVA provides investment advisory services to institutions, pension and profit sharing plans,
trusts, charitable organizations, government pension plans, a registered investment company,
private funds, and a Luxembourg registered UCITS.
IVA requires a minimum investment of $100,000,000 for separate accounts. The Private Funds,
Mutual Funds, and UCITS have various minimum investment requirements. See the applicable
offering memoranda or prospectuses for further details. IVA, at its sole discretion, may accept
capital contributions of a lesser amount or establish different minimums in the future. In
addition, IVA, in its sole discretion, may reject any subscription or separate account.
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International Value Advisers, LLC (IVA) seeks long-term growth of capital by investing in a
range of securities and asset classes from markets around the world. Over the short-term (12-18
months), our attempt is to preserve capital, while over the longer-term (5-10 years, i.e., over a
full economic cycle), we seek to outperform equity indices. We are absolute return oriented
investors.
We employ a fundamental, bottom-up approach and will seek investments in mostly quality
businesses with securities trading at what we believe to be a meaningful discount to our intrinsic
value estimate. We define intrinsic value as "the amount that a knowledgeable investor or
corporate competitor would pay - in cash - for 100% of the economic and controlling interests of
a company.” A security is deemed attractive if there is a suitable margin of safety, meaning that
the market price of a security is trading at a meaningful discount to its intrinsic value estimate.
The size of the discount required and the position size is determined by the following criteria:
quality of business, quality of balance sheet, ability for intrinsic value growth, quality of
management, quality of capital allocation, liquidity/free float, dividend payout, and
concentration/quality of shareholders.
Additionally, we employ a flexible approach, which may include securities across all asset
classes (equities, fixed income, gold, cash) and securities throughout the capitalization spectrum
(small, mid, large caps).
We believe that this investment approach emphasizes capital preservation while still providing
the capacity to outperform equity indices over the long term.
The first step of our stock selection process is to identify undervalued, quality businesses. A
quality business is defined by IVA as having:
• High returns on capital employed
• Strong barriers to entry and unique franchise values
• Ability to exercise pricing power
• Significant free cash flow generation over a full economic cycle
• Potential to grow intrinsic values at or faster than GDP (Gross Domestic Product)
• Sustainable earnings power
Next, the intrinsic value of a security is determined by the analyst through intensive research of
past annual reports and other filings, and from their knowledge of the industry. Once an intrinsic
value has been determined, a purchase decision is made based on whether the security is trading
at a suitable discount to its intrinsic value. The specific size of the discount required and the
position size is determined by the following criteria:
• Quality of Business
• Quality of Balance Sheet
• Ability for Intrinsic Value Growth
• Quality of Management
• Liquidity/ Free Float
• Dividend Payout
• Concentration/ Quality of Shareholders
IVA’s computation of a company’s intrinsic value is based on internally generated assumptions
and opinions of key variables affecting the company’s business. These variables may materially
influence the assessed intrinsic value and perceived margin of safety to the internally calculated
intrinsic value. Variables used in the computations are the opinion of IVA and may change
without notice at any time.
As with any investment, clients should be aware of the risk of losing all or part of their capital.
Although we try to mitigate risks, clients face the following types of risks:
Management Risk: This is the risk that IVA’s investment strategy, the implementation of which
is subject to a number of internal and external constraints, may not produce the desired results,
including the risk that IVA’s judgments about securities and asset allocations may not be correct
and could adversely affect performance.
Stock Market Risk: The trading prices of equity securities fluctuate in response to a variety of
factors. These factors include events impacting a single issuer, as well as political, market and
economic developments that affect specific market segments and the stock market as a whole.
Foreign Securities Risk: Investing in foreign securities can involve additional risks relating to
political, economic or regulatory conditions in foreign countries. These risks include fluctuations
in foreign currencies; withholding or other taxes; trading, settlement, custodial, and other
operational risks; and less stringent investor protection and disclosure standards of some foreign
markets.
Precious Metals Risk: Prices of precious metals and of precious metal related securities
historically have been very volatile. The production and sale of precious metals by governments
or central banks or other larger holders can be affected by various economic, financial, social and
political factors, which may be unpredictable and may have a significant impact on the prices of
precious metals. Other factors that may affect the prices of precious metals and securities related
to them include changes in inflation, the outlook for inflation and changes in industrial and
commercial demand for precious metals.
Risks of Debt Securities: Risks associated with investments in fixed income securities include
credit risk, interest rate risk and high-yield securities risk.
Emerging Markets Risk: Securities listed and traded in emerging markets are subject to
additional risks associated with emerging market economies. Such risks may include: (i) greater
market volatility; (ii) lower trading volume; (iii) greater social, political and economic
uncertainty; (iv) governmental controls on foreign investments and limitations on repatriation of
invested capital; (v) the risk that companies may be held to lower disclosure, corporate
governance, auditing and financial reporting standards than companies in more developed
markets; and (vi) the risk that there may be less protection of property rights than in other
countries.
Derivative Investment Risk: Derivatives are subject to a number of risks, such as interest rate
risk, market risk, credit risk, foreign exchange risk and management risk. Changes in the value of
the derivative may not correlate perfectly with the underlying asset, rate or index, and a client
may lose more money than its initial investment in the derivative. A small investment in a
derivative could have a relatively large positive or negative impact on performance potentially
resulting in losses to clients.
Please see the offering memoranda for the private funds and prospectus for the mutual funds and
UCITS for additional risk information.
Investing in securities involves risk of loss that clients should be prepared to bear.
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There are no legal or disciplinary events that are material to a client’s or prospective client’s
evaluation of this advisory business or the integrity of our management.
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IVA is not registered as a broker-dealer but a number of our employees are registered
representatives of an unaffiliated broker-dealer. The purpose of the registration is to provide for
the proper supervision of those IVA employees involved in soliciting investments in our
affiliated mutual funds, IVA Worldwide Fund and IVA International Fund.
IVA also manages two private funds: IVA Global Fund (Delaware) L.P. (the “Global Fund”) and
a Cayman-based master fund, IVA Overseas Master Fund, L.P. (the “Overseas Fund”). IVA
Global Fund GP, LLC, a Delaware limited liability company, is the Global Fund's general
partner. IVA Overseas Fund GP, LLC, a Delaware limited liability company, is the general
partner to the Overseas Fund. IVA is the managing member of the general partners. The
principal ownership of IVA is outlined in Item 4, Advisory Business.
We do not recommend our mutual funds or private funds to separate account clients in order to
avoid creating a conflict of interest.
Michael Malafronte, IVA’s Managing Partner, serves on the Board of Adtalem Global Education
Inc. (“Adtalem”). Although no clients own Adtalem, IVA has policies and procedures in place
to mitigate the risk of the flow of material non-public information.
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Personal Trading IVA has adopted a Code of Ethics (the “Code”) pursuant to the provisions of SEC rule 204A-1
under the Investment Advisers Act of 1940, as amended. The Code of Ethics was developed
based on various U.S. securities laws and regulations governing the use of confidential
information and personal securities transactions. The Code sets forth procedures and restrictions
regarding personal trading and related activities of personnel that are designed to detect and
prevent conflicts of interests between IVA and our clients.
All employees may transact for their personal accounts, however, non-investment team
employees are only permitted to execute buy transactions on any 12 trading days per year.
Whereas, investment team employees, which include analysts and traders, are only permitted to
execute buy transactions on any 4 trading days per year. Partners of IVA may not transact in
equity securities and are subject to additional trading restrictions adopted by IVA’s Board of
Directors. All transactions are subject to pre-approval by the Chief Compliance Officer and are
not permitted for the following securities: (i) securities that are currently being bought or sold
for any Client; (ii) securities that are currently under review or consideration for purchase or sale
by a client; and (iii) securities held by client that have not been made public by way of a
regulatory filing or published on the company website. In addition, personal trading is
prohibited in all securities that are convertible, exchangeable, or exercisable into such security.
Employees are required to submit quarterly reports of security transactions for their personal
accounts and report personal holdings upon hire and annually thereafter. IVA prohibits
employees from accepting gifts of any material value from any person that does business with or
on behalf of IVA. Employees are required to obtain advance approval from the Chief
Compliance Officer to make political or certain charitable contributions or serve as a director or
trustee of unaffiliated for-profit and non-profit organizations. All employees are required to
certify annually that they have complied with the Code.
A copy of our Code of Ethics will be provided to clients or prospective clients upon request.
We do not recommend our mutual funds or private funds to separate account clients to avoid
creating a conflict of interest.
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We prefer to select the broker-dealers that will execute portfolio transactions for our clients.
Although it is possible for a client to direct the use of a particular broker-dealer, currently all of
our clients leave that selection to us.
Directing brokerage to a particular broker-dealer may involve the following disadvantages to
directed brokerage clients: impairing the ability to negotiate commission rates and other terms on
behalf of directed brokerage clients; denying directed brokerage clients the benefit of the our
experience in selecting broker-dealers who are able to execute difficult trades efficiently;
limiting directed brokerage clients' opportunities to obtain lower transaction costs and better
prices by aggregating their orders with orders for other clients; receiving less favorable prices on
securities transactions to the extent that the we must place transaction orders for directed
brokerage clients after placing aggregated transaction orders for other clients.
IVA's principal objective in selecting broker-dealers and entering trades on behalf of clients is to
obtain best execution in connection with such transactions. Although IVA seeks competitive
commission rates and equivalents, it will not necessarily pay the lowest commission available or
equivalent. Transactions may involve specialized services on the part of a broker-dealer, which
may justify higher commissions and equivalents than would be the case for more routine
services. IVA's decision to purchase or sell securities through brokers is based on a number of
overall factors, including but not limited to execution price, the ability to handle block trades,
timeliness of the transaction, risk and reputation of the counterparty.
IVA does not intend to seek lower brokerage commissions to the extent that doing so may detract
from receiving valuable brokerage and research services that benefit all of our clients. The
commissions or equivalents paid to any one broker-dealer may be greater than the amount
charged by another firm for executing the same transactions if IVA determines, in good faith,
that the amount of commissions charged by a broker-dealer is reasonable in relation to the value
of the brokerage and research services provided to our clients.
We routinely receive investment research from sell-side broker-dealers. IVA believes this
research is made available to all institutional money managers conducting business with such
broker-dealers. We also obtain research by entering into commission sharing arrangements
(“CSAs”). Under a CSA, IVA may execute a transaction through a broker-dealer and request
that the broker-dealer allocate a portion of the commission to another firm that provides valuable
research. The receipt of the above-mentioned research is considered soft dollars. The use of
commissions or soft dollars to pay for certain research products or services is expected to fall
within the safe harbor created by Section 28(e) of the Securities Exchange Act of 1934. Such
products or services received by brokers as a result of clients’ transactions may be used by us in
servicing other accounts.
IVA benefits from receiving research by not having to produce or pay for it ourselves. This may
give us an incentive to select broker-dealers based on our interest in receiving research rather
than on our clients’ interest of receiving most favorable execution. We are aware that our clients
may not pay the lowest commission in all circumstances, however, the research and level of
service benefits all accounts and we believe that it is in the clients’ best interest to pay a higher
commission than the lowest available.
We may aggregate or “bunch” orders for multiple client accounts when we believe that bunching
will result in a more favorable overall execution. If appropriate, we will allocate these bunched
orders at the average price obtained. We may bunch a client's trades with trades of other clients
and with accounts affiliated with IVA where we have a beneficial interest. We allocate in good
faith pursuant to a process that we consider to be fair and equitable to all clients over time.
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One, or both, of the Portfolio Managers performs a brief overview of each client account daily.
In-depth portfolio reviews are conducted monthly to gauge the appropriateness of the
investments held, although unusual or abnormal performance will trigger more frequent reviews.
For our separately managed account clients, we provide monthly and quarterly reporting.
Monthly reports consist of performance and portfolio appraisals. Quarterly reports typically
include performance, an update from the Portfolio Managers, and attribution analysis.
For our Mutual Funds (IVA Worldwide Fund and IVA International Fund), we provide a
monthly portfolio composition which includes a breakdown by asset and region, and a list of top
10 holdings. Quarterly, we provide a fact sheet, portfolio commentary and performance analysis.
The fact sheet includes top 10 holdings, asset/sector/region allocations, and portfolio
characteristics. The commentary and performance analysis together include general attribution
analysis, portfolio positioning, and a general outlook.
For our Private Funds, we provide a monthly portfolio composition and performance email.
Quarterly, we provide a portfolio commentary and performance analysis.
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We may subscribe to certain data and research services provided by firms that may also serve as
consultants to clients or potential clients. These subscriptions provide access to industry data,
research, analytics, performance measurement, and peer comparisons and may include IVA in
databases available to other subscribers or users. We do not seek and do not receive referrals for
advisory services from these organizations as a result of subscribing to such services, although it
is possible that we may be contacted by other subscribers or users concerning their advisory
services.
IVA engages the services of a placement agent to assist in securing investors for the Private
Funds. The placement agent is paid based on a portion of the advisory fees received by the
investor.
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Separate accounts are held at qualified custodians who provide account statements directly to
clients at their address of record at least quarterly. Although we send our own statements to
clients, the statements received for the custodian are the official record of the accounts and we
encourage clients to compare and verify our statements with the information on the statements
received from the custodian.
We are deemed to have custody of the Private Fund assets. The funds are audited annually by an
independent public accountant that is registered with, and subject to regular inspection by, the
Public Company Accounting Oversight Board ("PCAOB") in accordance with its rules. Audits
are sent to private fund investors annually within 120 days of the fiscal year end.
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IVA has discretionary authority to manage securities accounts on behalf of clients. We have the
authority to determine, without obtaining specific client consent, the securities to be bought or
sold, and the amount of the securities to be bought or sold. Clients may place certain restrictions
on security types or asset classes and may choose a global custodian. An investment advisory
contract authorizing discretionary authority is executed with clients before we begin managing
any client accounts.
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IVA has adopted a set of proxy voting policies and procedures to ensure that proxies are voted in
the best interest of our clients, in accordance with our fiduciary duties and Adviser Act Rule
206(4)-6.
IVA is responsible for voting any proxies related to securities that it manages on behalf of its
clients. Our policy is to vote all proxies from a specific issuer in the same way for each client.
Any directions from clients to the contrary must be provided in writing. IVA attempts to consider
all factors that could affect the value of the investment and will vote proxies in the manner that
we believe will be consistent with efforts to maximize shareholder values. The policy sets forth
guidelines on how we will generally vote on certain proxy proposals. We will attempt to identify
any conflicts that exist between the interests of IVA and the client by reviewing the relationship
of IVA with the issuers of each security to determine if a financial, business or personal
relationship exists. If a conflict exists, proxies will be voted in accordance with pre-determined
guidelines or the recommendation of an independent third-party. If a conflict is deemed material,
the Chief Compliance Officer will determine an appropriate course of action, including
disclosing the conflict to the client.
If clients do not give us the authority to vote proxies on their behalf, clients should receive proxy
solicitations directly from their custodian or transfer agent. Clients may contact us directly if
they have a specific question regarding a solicitation.
We maintain copies of proxies and a record of how they were voted so that we may respond to
any question a client may have. Client proxy voting records and a full copy of our Proxy Voting
Policies and Procedures are available upon request.
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We do not have any adverse financial information to disclose. Our management believes that we
are financially sound, well capitalized, and have no financial issues that would preclude us from
meeting contractual commitments to clients. The firm has an audit conducted annually by an
independent public accountant.
Item 19 - State Registered Advisers We are registered with the Securities and Exchange Commission and have no disclosures under
this item.
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Open Brochure from SEC website