Pear Tree Polaris Foreign Value Fund
The Pear Tree Polaris Foreign Value Fund is subadvised by Polaris Capital Management and has been managed by Bernie Horn since inception. The Fund is modeled after the Polaris International Equity strategy which we believe to be the longest running track record in the international equity space, run by the same portfolio manager, utilizing the same process and philosophy since inception (1984). Polaris Capital Management, LLC is a Boston, Massachusetts money manager that specializes in the management of international equity portfolios.
Polaris employs an unconstrained pure value equity selection process that is characterized as an active, all-capitalization investment approach. The approach utilizes bottom-up research to uncover the most undervalued streams of free cash flow in the world. Identifying these streams of sustainable cash flow (e.g. companies) requires a “statistically patient” investment process. Polaris’ investment team believes normal market fluctuations will continue to produce undervalued companies.
The investment strategy strongly emphasizes valuation over growth. The process is designed to identify companies that generate strong sustainable free cash flow, often have conservative balance sheets and are capable of growing stronger in difficult economic times. In order to implement this philosophy, each company’s valuation model is based on current cash flow from operations and a highly conservative 0% to 2% terminal real growth rate.
The investment philosophy has been in place since 1984, with minor changes along the way to improve the process.
The Fund will generally own approximately 50 non-U.S. companies located in the countries comprising the Morgan Stanley Europe, Australasia and Far East (EAFE) Index. In addition, the Fund may also invest a portion of its assets in emerging markets. The Fund’s investment process will generally lead the Fund to be invested in 15 or more foreign markets and industries reducing the likelihood that negative performance of a single country or industry will significantly impact the Fund’s return.
Foreign Exposure. Foreign markets, particularly emerging markets, can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market, or economic developments and can perform differently from the U.S. market. Emerging markets can be subject to greater social, economic, regulatory, and political uncertainties and can be extremely volatile.