Charles de Vaulx

Charles de Vaulx is a French-born asset manager (i.e., one who practices asset management), noted for his value investing in the spirit of Graham and Dodd.

Background and history

He earned a Master in Finance from Ecole Supérieure de Commerce de Rouen, France. In January 1987, de Vaulx joined the SoGen Funds, working under Jean-Marie Eveillard as an analyst. In August 1996, de Vaulx became an associate portfolio manager. In 1999, Société Générale sold the SoGen Funds to Arnold and S. Bleichroeder Advisers and the funds were renamed First Eagle Funds. In January 2000, de Vaulx was made co-portfolio manager of four funds and a number of institutional accounts. In December 2001 he and his colleague Jean-Marie Eveillard were awarded Morningstar's "International Stock Manager of the Year." De Vaulx was designated as the hand-picked successor to Eveillard who went on to retire in December 2004, making de Vaulx the lead portfolio manager in January 2005. Surprising the industry, as well captured by the media at the time ( see the MarketWatch story ) de Vaulx left First Eagle, this just weeks after winning another Morningstar award in December 2006 as the runner-up for "International Stock Manager of the Year." In 2008, de Vaulx joined International Value Advisors.^[1][2]

Portfolio management

De Vaulx's portfolio management style has been characterized as value-oriented and long-only. This value tilt tends to find de Vaulx investing into firms with stronger cash flows which happen to be selling at some discount, and where those cash flows also turn into higher yields for investors. So his portfolios tend to have higher yields than the index. From his history at First Eagle (2000 - early 2007), he also tends to keep a goodly amount of cash on hand, but part of this could be explained by the dearth of values some of that time. Notably, de Vaulx's funds tended to underperform in up markets during a boom (for example, the dot-com bubble). However, de Vaulx's large cash positions also helped to mitigate the impacts of the 2000-2002 stock market correction, when a number of his funds outperfomed by large margins. Additionally, de Vaulx tended to keep some small part of the portfolios in gold and in bonds, thus providing additional hedges to the equity volatility. Unsurprisingly, these non-correlating assets tended to give the portfolios low R-squareds to most indexes. The combination of large cash holdings with stocks paying above average dividends with some other non-correlating assets created low Beta portfolios with market-beating Sharpe ratios.^[3][4] Of course, past performance is no guarantee of future returns, but some academic literature does seem to suggest that low-beta asset allocations do provide greater Sharpe ratios over time. Counter to that literature is the premise that "there is no free lunch" and that any outperformance will eventually disappear as copy-cats reduce margins of outperforming managers.

References

1. ^ IVA Fund Fact Sheet (Page Not Found)
2. ^ First Eagle History
3. ^ Morningstar Rating on the First Eagle Overseas Fund
4. ^ Morningstar Rating on the First Eagle Global Fund

External links

• CBS MoneyWatch.com with picture of Charles de Vaulx

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Name	De Vaulx, Charles
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