Core|Satellite Investing with First Eagle Funds
First Eagle News
Many practitioners of core|satellite investing use the core of the clients' portfolios to generate market-like returns with market-level risk exposure, or beta, and use satellite investments to produce excess returns or alpha. Within this framework, passive investment vehicles - index funds and ETFs - have become standard core investments.
At First Eagle, we question the foundation of this approach to portfolio allocation. Beta, we have all discovered, can expose an investor to a very bumpy ride. In our opinion, the graver concern for investors is not short-term volatility, alarming and uncomfortable as it may be, but the possibility of permanent impairment of capital.
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Consider First Eagle Global Fund as Part of Your Active Core
- We have the flexibility to invest across the capital structure, providing a foundation of diversifying asset classes with the opportunity to generate returns above the market, while potentially minimizing volatility.
- The Fund's go-anywhere approach enables investing in a variety of countries, sectors and market capitalizations without constraints from industry benchmarks, creating one of the strongest mutual fund track records in history.
- With capital preservation as a goal, First Eagle applies the prudence required to mitigate risk while attempting to generate positive absolute returns over time and has historically offered downside protection during market bubbles.
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First Eagle Overseas Fund (SGOVX), First Eagle Gold (SGGDX), First Eagle U.S. Value Fund (FEVAX) and First Eagle Fund of America (FEAFX) should also be considered for your portfolio's satellite investments, providing additional exposure to international equity, gold and U.S. equity markets, respectively.
Flexibility | Historical Asset Allocation
First Eagle Global Fund has the flexibility to go anywhere, invest in any and all asset classes from equity to fixed income, from cash to gold bullion. It is our view that managers who are allowed to make independent investment decisions, are more likely to outperform over the long term.
Stability | Calendar Year Return versus Market Indices
As a go-anywhere fund, First Eagle Global Fund uses diversification both to enhance returns and to reduce risks. While one year's top-performing asset class may fall to the bottom the following year, the fund does not try to time the market through opportunistic shifts in allocations. As illustrated in the chart above, First Eagle Global Fund provided stable performance that investors sought for the core of their portfolios.
Prudence | 10-Year Risk vs. Return as of 06/30/10*
First Eagle Global Fund has generated positive returns while assuming low risk relative to industry benchmarks over time. We construct well diversified portfolios through prudent security selection with an emphasis on risk aversion. Our insistence on a substantial margin of safety, healthy balance sheets and clear business models enables the avoidance of risk and the capability to generate positive absolute returns over time.
The performance data quoted herein represents past performance and does not guarantee future results. Market volatility can dramatically impact the fund’s short-term performance. Current performance may be lower or higher than figures shown. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Past performance data through the most recent month end is available at firsteaglefunds.com or by calling 800.334.2143.
There are risks associated with investing in funds that invest in securities of foreign countries, such as erratic market conditions, economic and political instability and fluctuations in currency exchange rates. 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. The portfolio is actively managed and holdings can change at any time. Current and future portfolio holdings are subject to risk.
* This chart illustrates risk and return data for Class A Shares without the effect of sales charges and assumes all distributions have been reinvested, and if a sales charge were included, values would be lower.
The MSCI World Index is a widely followed, unmanaged group of stocks from 23 international markets and is not available for purchase. The index provides total returns in U.S. dollars with net dividends reinvested. The MSCI EAFE Index is a total return index, reported in U.S. dollars, based on share prices and reinvested net dividends of approximately 1,100 companies from 21 countries and is not available for purchase. Standard & Poor’s 500 Index is a widely recognized unmanaged index including a representative sample of 500 leading companies in leading sectors of the U.S. economy and is not available for purchase. Although the Standard & Poor’s 500 Index focuses on the large-cap segment of the market, with approximately 75% coverage of U.S. equities, it is also considered a proxy for the total market. The Barclays Capital U.S. Aggregate Bond Index is a benchmark index composed of U.S. securities in Treasury, government-related, corporate and securitized sectors. The BoA Merrill Lynch High Yield Master II Index is a commonly accepted measure of the performance of domestic, below-investment-grade high-yield corporate debt securities. The Russell 3000 Index is an unmanaged index that measures the performance of the 3,000 largest U.S. companies based on market capitalization, which encompasses 98% of the total market capitalization of the publicly traded U.S. equity market, and is not available for purchase. The MSCI EMF (Emerging Markets Free) Index is a market capitalization weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The MSCI EMF Index excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners.
The opinions expressed are not necessarily those of the firm. First Eagle Investment Management, LLC (FEIM) became investment adviser to the Fund commencing January 1, 2000. These materials are provided for informational purpose only. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Any statistics contained here have been obtained from sources believed to be reliable, but the accuracy of this information cannot be guaranteed. The views expressed herein may change at any time subsequent to the date of issue hereof. The information provided is not to be construed as a recommendation or an offer to buy or sell or the solicitation of an offer to buy or sell any fund or security.
The First Eagle Funds are offered by FEF Distributors, LLC, member SIPC, 1345 Avenue of the Americas, New York, New York 10105. Investors should consider investment objectives, risks, charges and expenses carefully, which are detailed in our prospectus. Please read our prospectus carefully before investing. For further information about the First Eagle Funds please call 800.334.2143. Investments are not FDIC insured or bank guaranteed, and may lose value.
For further information, please contact us at info@firsteaglefunds.com or visit the Contact Us page.
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