Does Your International Allocation Have the Right Mix?

By combining a portfolio of international large and small cap investment styles, investors have historically been rewarded with improved portfolio diversification and strong risk-adjusted returns.


Small cap stocks can complete the market cap range of an international portfolio

  • Investors have increasingly added international exposure to their portfolio in order to access strong earnings growth outside the U.S. and diversify their holdings
  •  However, many investors have gravitated to large-cap investment styles, missing out on the opportunity that exists in the broad universe of international small cap securities
  • By combining a portfolio of international large and small cap investment styles, investors complete the market cap range of their international portfolio—and have historically been rewarded with improved portfolio diversification and strong risk-adjusted returns
     

A fund pairing to consider:

Harding Loevner International Equity Portfolio and AMG TimesSquare International Small Cap Fund

Over the last five years, an international allocation consisting of 70% Harding Loevner International Small Cap Portfolio and 30% AMG TimesSquare International Small Cap Fund would have meaningfully outperformed the MSCI All Country World Index ex USA (MSCI ACWI ex USA) with lower volatility and less risk.

Source: FactSet. Please see below for standardized performance information. Past performance is no guarantee of future results.

Source: FactSet. Please see below for standardized performance information. Past performance is no guarantee of future results.

As of 09/30/18, HLMNX was rated 4, 4, 4, and 4 stars for the Overall, 3-, 5-, and 10-year periods against 347, 347, 313, and 222 Foreign Large Growth funds, respectively. As of 09/30/18, TCMPX was rated 4, 3 and 4 stars for the Overall, 3-, and 5-year periods against 110, 110 and 103 Foreign Small/Mid Growth funds, respectively.

Harding Loevner International Equity Portfolio average annual returns (%)1 (as of 09/30/18)

  Inception QTD YTD 1 Yr 3 Yr 5 Yr 10 Yr Since Incpt
HLMNX (Investor) 09/30/05 1.59 0.97 5.48 13.51 6.66 7.53 6.68
HLMIX (Institutional) 05/11/94 1.67 1.27 5.85 13.89 7.00 7.88 6.46
HLIZX (Institutional Class Z) 07/17/17 1.67
1.32 5.88 –– ––
––
8.15
MSCI ACWI ex USA –– 0.71 -3.09 1.76 9.97 4.12 5.18 4.59

Expense Ratios (gross/net): HLMNX (Investor) - 1.14% / 1.14% HLMIX (Institutional) - 0.82% / 0.82% HLIZX (Institutional Class Z) - 0.99%2 / 0.74%3

Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Portfolio may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 435-8105 or visiting hardingloevnerfunds.com. Performance data shown does not reflect the 2.00% redemption fee imposed on shares held 90 days or less; otherwise, total returns would be reduced.

The Portfolio's investment objectives, risks, charges and expenses must be read and considered carefully before investing. The statutory and summary prospectuses contain this and other important information about the investment company. They may be obtained by calling toll free (877) 435-8105, or visiting hardingloevnerfunds.com.

Mutual fund investing involves risk. Principal loss is possible. The Portfolio invests in foreign securities, which will involve greater volatility and political, economic, and currency risks and differences in accounting methods. It also invests in emerging markets, which involve unique risks, such as exposure to economies less diverse and mature than the U.S. or other more established foreign markets. Economic and political instability may cause larger price changes in emerging markets securities than other foreign securities. Such risks may be magnified for securities in frontier emerging markets. Investing in participation notes involve the same risks associated with a direct investment in the underlying security, currency or market.

Diversification does not guarantee a profit or protect against a loss in declining markets.

The MSCI All Country World Index (ACWI) ex-USA is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI ex-USA consists of 22 developed and 24 emerging market country indices. Please go to msci.com for the most current list of countries represented by the index. Indices are unmanaged, are not available for investment and do not incur expenses.

The Portfolio is distributed by Quasar Distributors, LLC. AMG Distributors, Inc. provides support on a wholesale basis related to making the Harding Loevner Funds available through various intermediaries. Quasar Distributors, LLC is not affiliated with AMG Funds LLC or AMG Distributors, Inc.

AMG TimesSquare International Small Cap Fund average annual returns (%)1 (as of 09/30/18)

  Inception QTD YTD 1 Yr 3 Yr 5 Yr Since Incpt
TCMPX (Class N) 01/02/13 -3.64 -0.18 11.99 12.21 13.07 13.13
TQTIX (Class I) 02/24/17 -3.62 -0.12 12.19 –– –– 21.93
TCMIX (Class Z) 01/02/13 -3.61 -0.06 12.19 12.46 13.31 13.34
MSCI EAFE Small Cap Index –– -1.57 -1.33 12.45 10.09 11.32 11.05*

Expense Ratios (gross/net): Class N 1.24% / 1.24% - Class I 1.04% / 1.04% - Class Z 0.99% / 0.99%

The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance data quoted. The investment return and the principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. For performance information through the most recent month end please call 800.835.3879 or visit our website at amgfunds.com.

Investors should carefully consider the Fund's investment objectives, risks, charges and expenses before investing. For this and other information, please call 800.835.3879 or visit amgfunds.com for a free Prospectus. Read it carefully before investing or sending money.

A short-term redemption fee of 2% will be charged on shares held for less than 60 days.

Investments in international securities are subject to certain risks of overseas investing including currency fluctuations and changes in political and economic conditions, which could result in significant market fluctuations.

The Fund is subject to the risks associated with investments in emerging markets, such as erratic earnings patterns, economic and political instability, changing exchange controls, limitations on repatriation of foreign capital and changes in local governmental attitudes toward private investment, possibly leading to nationalization or confiscation of investor assets.

The Fund is subject to risks associated with investments in small-capitalization companies, such as erratic earnings patterns, competitive conditions, limited earnings history and a reliance on one or a limited number of products.

The Fund may invest in derivatives such as options and futures; the complexity and rapidly changing structure of derivatives markets may increase the possibility of market losses.

The Fund invests in growth stocks, which may be more sensitive to market movements because their prices tend to reflect future investor expectations rather than just current profits. Growth stocks may underperform value stocks over given periods.

The MSCI EAFE Small Cap Index covers all investable small-cap securities with a market capitalization below that of the companies in the MSCI Standard Indices of developed markets, excluding the U.S. and Canada. Please go to msci.com for the most current list of countries represented by the index.

Indices are unmanaged, are not available for investment and do not incur expenses.

AMG Funds are distributed by AMG Distributors, Inc., a member of FINRA/SIPC.

Not FDIC Insured | May Lose Value | Not Bank Guaranteed

1 Returns for periods less than one year are not annualized.

2 The Gross Expense Ratio is as of the Prospectus dated February 28, 2018.

3 The Net Expense Ratio is as of September 30, 2018, as the Portfolio is operating below the contractual agreement, which is in effect until February 28, 2019.

* Since the inception of the Fund's Class N and Class Z shares on January 2, 2013.


Standard Deviation: Annualized standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is calculated as the square root of variance.

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 20 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar Rating is for the share class indicated only (see Ticker), other share classes may have different performance characteristics. The Ranking may reflect the waiver of all or a portion of the Fund's fees. Without such waiver, the Rankings may have been lower.

© 2018 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

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Funds To Consider

HLMNX

Harding Loevner International Equity Portfolio

The Portfolio seeks long-term capital appreciation through investments in equity securities of companies based outside the United States.

View Fund Details

TCMPX

TimesSquare International Small Cap Fund

Seeks to provide long-term capital appreciation by primarily investing in international small cap companies.

View Fund Details
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