Dull Holding's Performance Sparkles

Last March I profiled the Lazard World Dividend & Income Fund (LOR - commentary - Cramer's Take). I was generally favorable on the fund, and so far, it has lived up to my expectations. With the U.S. market at 900 days and counting without a 10% correction, a very long time by historical standards, I'd like to revisit this low-beta, high-yielding fund.

As a lower-beta instrument, the fund managers aim for performance that is less volatile than the market -- or in this case, markets -- but that still captures gains. World Dividend & Income invests mostly in high-yielding stocks from around the world. The fund also invests a portion (with leverage) in emerging-market currencies via derivatives to take advantage of higher yields elsewhere in the world.

Since my last column, foreign markets endured a nasty correction, which has almost been made back. The chart shows that the fund certainly was not immune from the decline, but it dropped much less than the broad-based iShares MSCI EAFE Index Fund (EFA - commentary - Cramer's Take). Year to date, World Dividend & Income has outperformed both iShares MSCI EAFE and the S&P 500 with a lower beta. World Dividend & Income has a beta of 0.62 and iShares MSCI EAFE's is 1.2, while the S&P 500, of course, has a beta of 1.00, being "the market."

Strong Performer World Dividend & Income has bested both a peer and the market

Source: BigCharts.com

Another of World Dividend & Income's appealing attributes is its low correlation to both the iShares MSCI EAFE, at 0.22, and the S&P 500, at 0.25, according to PortfolioScience.com.

In my previous column on World Dividend & Income, I noted that changes in the portfolio's composition were positive signs that the fund is in fact being actively managed. While not every tactical decision can be correct, Lazard's team here has demonstrated an aptitude for making changes.

When I first looked at the fund, it was heavy in higher-risk names such as Magyar Telekom (MTA - commentary - Cramer's Take), Bank Hapoalim of Israel and Telemar Norte Lieste (TNE - commentary - Cramer's Take). But by the time I wrote about World Dividend & Income in March, a couple of months before the big correction in the emerging markets, the fund had toned down that risk exposure by shifting more heavily into Verizon (VZ - commentary - Cramer's Take) and Bristol-Myers Squibb (BMY - commentary - Cramer's Take).

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At the time of publication, Nusbaum was long Verizon and iShares MSCI EAFE Index Fund for client accounts, although positions may change at any time.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, Ariz., and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.