The news from abroad is not good. Greece is being crushed under the weight of a massive debt crisis, and other countries could follow suit. In Asia, Japan is still reeling from the Toyota safety recalls, and China's central bank tightening this year is crushing equities there.

For IVA Worldwide, that's not a bad backdrop. Skippered by Charles de Vaulx and Charles de Lardemelle since its 2008 inception, the fund's deep value strategy holds up exceptionally well when markets head south. Of course IVA Worldwide had a hard time keeping pace during 2009's post-bear market surge because it refused to load up on speculative fare.

With its sizable holdings of cash and gold, it's not surprising that IVA Worldwide would shine in a cooler environment. The fund's 4.2% year-to-date mid-May return places it in the worldwide allocation category's top 5%, according to Morningstar. In 2009, though, IVA Worldwide placed in the top 56%, albeit with a 23% return.

GO ANYWHERE

Gold? Cash? Bonds? Sounds familiar? This strategy is almost identical to the one that de Vaulx and de Lardemelle practiced when they ran a handful of funds for Arnhold and S. Bleichroeder Advisers's First Eagle lineup. De Vaulx cut his teeth in international investing at the side of his mentor, Jean-Marie Eveillard, the famed international value manager. De Vaulx and de Lardemelle left First Eagle in mid-2007 to start International Value Advisers in New York.

The fund managers will go just about any place where bargains abound. De Vaulx and de Lardemelle's strategy rests on four pillars. The first is a willingness to bet against the market. For example, in the summer of 2008 as energy prices were soaring due to speculation, IVA owned just one oil name, ConocoPhillips, which amounted to less than 1% of assets.

Second is the ability to be a crossover investor. This sometimes means owning other asset classes, such as high-yield bonds, when they provide equitylike returns.

Third is plunging into hard assets like real estate and gold when the price warrants it. De Vaulx, like his mentor Eveillard, calls this portfolio insurance. When gold becomes correlated with equities, IVA scales back its exposure. Currently, the fund holds just 5% of its assets in gold, down significantly from the 23% stake it held last year.

Real estate is also used this way. In 2008, IVA moved into triple-A rated commercial mortgage-backed securities. The fund bought super-senior loans backed by real estate at 60 to 65 cents on the dollar. At that price, if all the properties in the pool collapsed in value by 70% from their appraised value at the top, the managers would still recoup their investment plus the coupon until maturity. That was attractive as yields were 9%. The fund is no longer buying new bonds because yields have dropped.

The final pillar of the strategy is letting cash pile up if there aren't enough stocks trading at significant discounts to intrinsic value. Today, 20% of the fund's assets are in cash.

TOUGH TIMES AHEAD

The IVA portfolio is both a collection of bargains around the world and a reflection of its managers' views of the global economy. These days it's a gloomy view indeed. With its cash, gold and high-yield bonds, only about half of the holdings are in stocks.

"We think we'll be in a three- to five-year cycle of modest growth in the United States," de Vaulx explains. "I don't see consumers becoming shopaholics again; I see credit being tighter and interest rates and taxes being up."

Ilana Polyak is a frequent contributor to Financial Planning.

Charles de Vaulx

Age: 48

Credentials: Masters in finance, Ecole Superieure de Commerce de Rouen

Experience: Co-portfolio manager, IVA Worldwide (2008-present); co-portfolio manager, IVA International (2008-present); partner, International Value Investors (2008-present); various roles, SoGen Funds and First Eagle funds (1987-2007); credit analyst, Societe Generale (1985-1987)

Ticker: IVWAX

Inception of fund: October 2008

Style: World allocation

Assets under management: $4.5 billion

Three- and five-year performance as of May 13, 2010: 22.56%

Expense ratio: 1.36%

Front load: 5%

Minimum investment: $5,000