Are Small Cap Stocks Poised to Bounce Back?

Posted by Dana Funds Investment Team on Feb 20, 2020 5:47:21 PM

Large-cap stocks have had quite the run recently. Who would have thought the tenth year of the current bull market would bring a 31.49% return for the S&P 500 Index - its strongest yearly performance since 2013? Considering the long-term average length of equity bull markets is a shade over seven years, 2019’s epic performance will likely stand out in investors’ minds for some time.

The fourth quarter was especially strong. Despite stumbling during the first two days of October, the S&P 500 Index reached new highs 22 times during the quarter, including nine records in the final 13 trading days of the year. While small-cap stocks participated in this rally, they still lagged large-caps for all of 2019 with the Russell 2000 Index up +9.94% for the quarter and +25.52% for the year.

While nobody should be complaining about such robust late-cycle returns, the underperformance of small-cap stocks is a bit confusing. Investors were in a risk-on mentality during much of 2019, and typically in this environment, “riskier” assets, including small-cap stocks, are expected to outperform. What is also perplexing is the lack of effect that the ongoing trade-war related headlines had on large cap stocks, since large cap companies tend to be more global in nature compared to the more domestic footprint of small caps’ business models.

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Why is ESG Investing Important?

Posted by Dana Funds Investment Team on Feb 13, 2020 3:54:59 PM

In our last two blogs on environmental, social and governance (ESG) investing we discussed the what and how of ESG investing.  In our final blog of the series we are going to explain why ESG investing is important for investors and for the future of the entire investment landscape. 

The adoption of ESG investment criteria in the investment community has hit a critical mass. Today, funds employing some form of sustainable investing strategy hold 25% of a company shares1 

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How Are ESG Funds Managed?

Posted by Dana Funds Investment Team on Feb 6, 2020 3:01:07 PM

There are a variety of styles in which environmental, social and governance (ESG) funds are managed.   As with classic fund investing, the typical ESG fund manager will consider traditional investment metrics incorporating factors such as valuation, growth, earnings and balance sheet health.  In addition to these financial metrics, the manager will incorporate an array of ESG metrics into the investment process, analyzing factors that include:

Environmental: pollution, consumption and disclosure 

Social: tobacco, labor practices, gambling, pornography, weapons 

Governance: board independence, CEO compensation, auditing processes 

Faith-based: abortion, contraception, alcohol

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What is ESG?

Posted by Dana Funds Investment Team on Jan 27, 2020 7:06:36 PM

Environmental, social and governance (ESG) investing is all the rage. When Dana Investments started our first ESG fund at the turn of the century, the total market size for ESG strategies was only $2 trillion. At the start of 2018, ESG strategies accounted for an astounding $12 trillion in investable assets! However, despite this robust demand, an air of ambiguity still hovers over the ESG marketplace. Investors are hearing about these funds and clearly want to know more. 

ESG, SRI (socially responsible investing), RI (responsible investing) and faith-based funds all fall under the umbrella of impact investments. The mandate for these funds is to consider the impact that corporate behavior has on shareholders, stakeholders and society. Impact investors not only want their returns, they want their returns to matter.

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Fully Invested? Here?

Posted by Dana Funds Investment Team on Jan 24, 2020 1:47:36 PM


Index 2019 Return
CRSP US Total Market Index  30.84%
FTSE All-World Ex-US Index  21.81%
BloomBarc US 5-10 Year Credit Index 13.90%


The index returns above are a snapshot of the robust returns for financial assets in 2019.  These returns were buoyed in the second half of the year with the reversal of two investment headwinds: interest rates and trade. The Federal Reserve lowered the Fed Funds rate by 0.75% while the U.S. and China made progress in their tenuous trade dispute. The gains in the equity market averages were accompanied by lackluster 3.5%* earnings growth. As a result, market valuations appear stretched.  Entering 2020 the Case Shiller P/E ratio is 31.19, a level of valuation exceeded only in 1929 and 1999.

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What Should We Expect from Equity Markets During Presidential Election Years?

Posted by Dana Funds Investment Team on Jan 16, 2020 9:59:26 AM

In case you somehow have not yet heard, 2020 is a presidential election year. In November, we Americans will go to the polls and collectively determine whether President Trump has earned another four years in office, or if we would be better served by the chosen Democrat candidate. While the race is sure to be hotly contested and the ad dollars good for network and social media bottom lines, what, if anything, does a presidential election portend for equity markets?

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Top 3 Blog Posts 2019

Posted by Dana Funds Investment Team on Jan 7, 2020 12:30:50 PM

Reflecting on 2019, but looking ahead to 2020! 

Below we highlight our most popular blog posts from 2019. We're all grateful for the support of our many loyal readers. As always, we welcome your questions or comments.  Also, if you would like for us to cover a specific topic in 2020, we would love to hear from you.  Just fill out the form on our contact us page and we will be in touch! 

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Correlation between ESG & Company Culture

Posted by Dana Funds Investment Team on Dec 18, 2019 4:43:55 PM

In his inaugural address on January 20, 1977, President Jimmy Carter extolled that the nation, “must adjust to changing times and still hold to unchanging principles.”  At times it seems we are living in a Moore’s Law-ian period of constant change.  In finance, this change has lowered costs for passive, index-based investors, shepherded the advent of quantitative analytics, and enabled investors to efficiently expand analytical horizons.

This expansion has helped usher Environmental, Social and Governance (ESG) investing criteria into the investment mainstream. According to The Forum for Sustainable and Responsible Investment, $12 trillion, or one-fourth of all US-based professionally managed assets, use ESG criteria in their analysis.  While there are studies that show consideration of these factors have led to better returns, the increased adoption of ESG criteria should be celebrated because we believe it fosters better corporate behavior.

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A Decade in Review – How Mobile Has Changed Our World

Posted by Dana Funds Investment Team on Dec 17, 2019 10:00:15 AM

The 2010s were full of change. In a 3-part blog series, we have taken time to review some of the most memorable changes from this past decade: The Effects of Climate Change, Central Banks Take the Wheel and below, How Mobile has Changed Our World.

Mobile Technology

In January 2010, the dawn of what would become a decade of unprecedented technological advancement, Steve Jobs stood on a stage in San Francisco and introduced the iPad.  Apple had just become the most valuable technology company on the planet and this new, touch-screen device would catapult the company to the first ever trillion-dollar valuation and forever change the computing world.

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A Decade in Review - The Effects of Climate Change

Posted by Dana Funds Investment Team on Dec 11, 2019 12:50:07 PM

As part of a 3-part blog series covering the most memorable changes from the 2010s, our 2nd post covers the effects of climate change. If you are interested in reading the first part in this Decade in Review series, Central Banks Take the Wheel, please see link below.

Climate Change

In mid-November the city of Venice, Italy experienced its worst flood in over fifty years.  Fueled by rising ocean waters, drudged canals and 75 mile-per-hour winds, the brackish waters of Laguna Veneta rose six feet above normal levels, flooding over 80% of the city.  The flood waters caused an estimated $1.1 billion in damages.  Included in that estimate is considerable damage done to St. Mark’s Cathedral whose crypt flooded for the first time since 1966.

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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.