Unlocking Global Value: A Quarter of Strategic Outperformance
Third Quarter 2025 Performance Overview: International Value Shines
During the third quarter of 2025, global value stocks demonstrated superior returns compared to their growth counterparts, with nearly all sectors within the MSCI EAFE index recording positive gains. This market trend significantly benefited the Touchstone International Value Fund, which successfully surpassed its benchmark, the MSCI ACWI Ex-U.S. Index.
Key Drivers of Fund Success: Deep-Value Bias and Astute Stock Selection
The fund's investment strategy, characterized by a pronounced deep-value bias, was a principal factor in its relative outperformance for the quarter. This approach, combined with strong stock selection, particularly in the Financials, Consumer Staples, and Health Care sectors, contributed positively to the fund's returns. Despite a modest negative impact from sector allocation decisions, the overall strategy proved effective.
Strategic Portfolio Positioning: Global Diversification and Sector Focus
The Touchstone International Value Fund targets value-oriented securities in non-U.S. developed and emerging markets, aiming for broad portfolio diversification across diverse international economies and industries. As of the third quarter, the fund maintains an overweight position in Financials, Consumer Discretionary, and Energy sectors, while being underweight in Communication Services, Information Technology, and Industrials, aligning with its systematic, valuation-driven methodology.
Future Outlook and Risk Considerations: Optimism Amidst Volatility
Management remains optimistic about the long-term prospects of the fund's deep-value positioning, believing it will continue to yield favorable returns. However, the fund acknowledges inherent risks including broader market volatility, potential limitations of its quantitative investment models, and the specific exposures associated with international markets.
Investment Philosophy: Distinctively Active Approach
Touchstone Investments is dedicated to an investment philosophy termed "Distinctively Active." This involves a rigorous, integrated process for selecting and collaborating with sub-advisers who manage their mutual funds. The firm champions a robust portfolio construction methodology that either employs standalone active strategies or complements existing passive strategies, thereby enhancing investor value.
Fund Characteristics: Emphasizing Market Depth and Valuation
The fund primarily focuses on companies with significant market capitalization in non-U.S. developed and emerging economies. It generally seeks out entities that are undervalued based on fundamental metrics, aiming to capitalize on market inefficiencies and long-term growth potential.