Mondrian International Government Fixed Income Fund

Fund Facts as of September 30th, 2018

Ticker LIFNX
Nex Expense Ratio* 0.60%
Gross Expense Ratio 0.85%
Sales Charge None
Inception Date 11/02/2007
Benchmark FTSE Non-Us WGBI
Minimum Initial Investment $1 million
Minimum Subsequent Investment $100
CUSIP 36381Y306

The Fund was previously the Laudus Mondrian International Government Fixed Income Fund and was reorganized into the Mondrian International Government Fixed Income Fund effective September 24, 2018. The Fund continues to be managed in the same way.

*Effective September 24, 2018, Mondrian Investment Partners Limited (the “Advisor”) has contractually agreed to waive fees and reimburse expenses to the extent necessary to keep Total Annual Fund Operating Expenses (excluding interest, taxes, brokerage commissions, acquired fund fees and expenses and non-routine expenses from exceeding 0.60% of the Fund’s average daily net assets until February 28, 2021.

FTSE non-US Dollar World Government Bond Index

Show More

Fund News

London, UK, September 2018 – Mondrian Investment Partners Limited announced the reorganizations of the Laudus Mondrian International Equity Fund (LIEIX), Laudus Mondrian Emerging Markets Fund (LEMNX) and the Laudus Mondrian International Government Fixed Income Fund (LIFNX) effective September 24, 2018.

With all three reorganizations, Mondrian transitioned from the sub-advisor to the advisor and will continue to apply Mondrian’s value investment philosophy, methodology and portfolio management process to each Fund.

Read more.

Fund Features

Universe of Securities

Mondrian will consider investing in the government debt of all countries within the FTSE non-US Dollar World Government Bond Index and other developed world bond markets. We continually research countries within the emerging world and may allocate between 0- 15% of the Fund in such bond markets.

Sovereign and supranational issues comprise the vast majority of a Fund.

Country Selection

Country allocation is determined by relative Prospective Real Yields (PRY). The top-level allocation is then determined by an optimization procedure that seeks to maximize portfolio PRY subject to tracking error. High PRY markets are overweighted, subject to constraints on the degree of dispersion from the benchmark index. 

Inflation forecasting is a key feature of our approach. We forecast inflation using econometric models for each local currency market. These capture the statistical relationships between demand-pull and cost-push price pressures. These models are supplemented by a quantitative analysis of factors that past statistical relationships might not capture but will affect future inflation, such as changes in government tax policy.

In order to assess sovereign credit risk, we take a quantitative approach that rates a country on four fundamental sets of factors (i) its domestic economy (ii) its institutional strength (iii) the country’s external sector and (iv) its fiscal outlook. If necessary, this rating leads to an adjustment to a country’s Prospective Real Yield (PRY) measure.

Currency Allocation

Currency management is seen as integral to a Fund’s total return. We believe that if a local bond market offers good value, the currency is likely to appreciate. However, there are situations when a currency may be undervalued or overvalued. In such situations portfolio currency exposures may differ from country exposures.

Forecasting currency movements consistently is impossible in our opinion. We, therefore, take a Purchasing Power Parity (PPP) valuation approach in order to gauge the fair value exchange rate of a currency. The PPP fair value exchange rate between two currencies is one that maintains purchasing power between them so that a basket of goods and services costs the same using either of the currencies. Since there are many influences on short-term currency movements, actual exchange rates will deviate from these fair values. However, when those deviations become large enough that the currency is extremely over or undervalued then we may decrease or increase exposure to that currency.

Duration/Maturity

We add further value and control interest rate risk through our duration/maturity strategy, although decisions on duration/maturity are secondary to the country/currency allocation. Mondrian employs a high duration/maturity strategy in markets that have relatively high PRYs to maximize the advantage. Similarly, we will adopt a low duration/maturity stance where PRYs are relatively low as a defensive move. Typically, our overall Fund duration is 75% to 125% of index.

The FTSE non-US Dollar World Government Bond Index A market capitalization index that measures the total rate of return performance for the government bonds of 22 countries, excluding the U.S., with a remaining maturity of at least 1 year.

 

Show More