Lower quality stocks have outperformed higher quality companies for much of the past year, helped by access to cheap debt and anticipation of an economic rebound. But that may be changing.
With more than $50 billion flowing into ESG strategies in 2020, and more than 350 different sustainable funds available to investors, the space remains a hot conversation topic among advisors and their clients.
Not surprisingly, our own ESG strategy, the Epiphany Fund, is one of the funds we are asked about most. This blog takes a short look at a couple questions we are asked most frequently, and our explanation for each:
Disruption and innovation are the very fabric of the American economy. So it’s little wonder that investors get excited about disruptive trends.
But once in a while, it’s worth taking a pause to put current disruption and innovation in perspective. Not only because the statistics can be eye popping, but because they help investors see the bigger picture, and take a long term view with stocks.
With that in mind, we offer a few short, simple statistics that put a few recent innovative and disruptive trends in perspective. The innovations are well known, but the statistics offer perspective on how far the trends have come, and how far they can still push forward.
Investment managers are always looking for an information edge in the stocks and companies they follow. Dana is not alone in this regard. But when it comes to garnering unique insights, we believe the world has never been more awash with opportunity. The reason: Technology, data and information are more readily available.
At Dana, we’ve always utilized what we believe is a distinct blend of quantitative screening and qualitative analysis to isolate investment opportunities. But here’s a look inside at some – but not all – of the new ways we are gathering information.
Editor’s note: Our consumer discretionary sector outlook is part of a regular series sharing our views on various sectors. It’s part of our efforts to increase communication with investors at a time of economic and market uncertainty. While the sector outlooks provide a short overview of our thinking, we invite you to contact us if you are interested in a deeper discussion.
The S&P 500 consumer discretionary sector hit several all-time highs in recent weeks, and higher valuations are likely warranted. Consider the backdrop: Consumers amassed $4 trillion in savings during the pandemic, household balance sheets are generally strong, the employment picture is starting to improve, stimulus checks are arriving in bank accounts, and credit is readily available. In short, spending should spring forward as COVID restrictions ease.
But valuations reflect many of these positives. This blog looks at some of the bright spots and remaining opportunities Dana sees within the sector, along with a few small pockets that warrant caution.
Risk controls … sell discipline … trading practices … investment policies. They are all an important part of the investment process that can, hopefully, distinguish an investment strategy.
But there’s another factor we believe is just as important (probably more so) in differentiating an investment manager: Idea generation. It’s what starts an analyst or portfolio manager on a path that creates a strategy that doesn’t replicate everyone else, and provides the client something truly distinctive.
Despite its importance, we get less questions about how we come up with investment ideas. We believe it’s a unique funnel, that tunes out noise and takes us beyond the road shows most portfolio managers attend. In a Q&A, we explained how we believe our process is different:
Value has trounced growth in 2021, causing allocators to wonder whether it is time to rotate toward the investment style that was unloved for much of the past decade.
However, we believe market dynamics make it a particularly tough time to favor growth or value. In light of the debate, we wanted to reshare a blog we wrote in June 2020, that advised against making tilts toward growth or value as we come out of the pandemic.
At the time, growth was outperforming, but many of the issues we raised about both style boxes still apply. The original text from the June blog follows:
Style Boxes Pose Pitfalls in Post-Pandemic Investment Landscape
Growth or value? It’s a question advisors and allocators ponder at every potential turning point in the market cycle. But as the world emerges from a pandemic-induced lockdown, the new investment environment may favor neither.
Last week marked a year since U.S. stock markets reached their trough, a period that saw the S&P 500 plunge 34% in just 23 trading days, as investors absorbed the implications of a global pandemic.
With distance between those volatile days, we wanted to reflect on three major investment themes that have taken shape since then. More importantly, we wanted to share three takeaways that we hope investors will remember in the future.
Spring is in the air which means one thing, it’s time for the annual tradition of Spring Break! While fun is encouraged, we invite you to relax and dive into these 10 books recommended by the investment team at Dana.
After a pandemic-related hiatus last year, we are excited to see the return of March Madness. For millions of Americans, filling out a bracket and participating in an office or family tournament pool is another small step in a return to the normal traditions we are accustomed to.
Many of us at Dana Investments are college basketball fans, so in the spirit of the season we offer a more light-hearted market outlook, sharing how we would seed some of the forces potentially supporting – or disrupting – the economy and markets.
We hope basketball fans will enjoy.
The 1 Seeds
In a March Madness tournament, the one seeds are those tried-and-true teams you would expect to do well. They are the “base case” for market and economic outlooks. While these teams, or market forces, are supposed to carry on, there’s a hitch: If they fail to perform as expected, it could disrupt the market …or, in the case of March Madness, bust many fans’ brackets. Here are a few forces we deem as 1’s:
The Dana Funds are distributed by Ultimus Fund Distributors, LLC. There is no affiliation between Ultimus Fund Distributors, LLC. and the firms referenced in this blog post.