Playing to Our Strengths in a Fed-Dominated Fixed-Income World

Posted by Dana Funds Investment Team on Jan 20, 2023 8:39:40 AM

We closed out 2022 with one of the biggest and best sporting events worldwide — the World Cup. While the game of soccer sometimes catches some flak for its lack of scoring and hard-hitting plays that we are accustomed to seeing in American football, the game of soccer is known throughout the world as “the beautiful game”. Yes, most of the typical game is spent with the ball being passed around the middle of the field, but it is those special few minutes when the action is confined near the goals where the magic happens. The last 18 yards on either side of the field or the “tails”, if you will, are the high impact areas that generally determine the outcome of the games. This analogy is similar to how investment managers create outperformance or alpha for their investment strategies.i Think of the middle of field as the “market consensus” or average expectations as a lot of time and investment discussions are spent in the middle of the field among the majority of market participants. If you want market returns then play it safe and spend all your time passing the ball around in the middle of the field but if you want to outperform the market then you have to do something different than the market consensus. You must spend some time in the goal areas or the tails if you want to outperform the market. At Dana, we are not in the business of trying to predict macro events — stock market moves or interest rate forecasts. We construct portfolios based on assessing risks and opportunities. When opportunities arise, we send the ball into the goal areas with the expectation to capitalize on the opportunity in order to generate outperformance for our investment strategies. As we look at the bond market today, we have the excitement of playing in a World Cup match and see tremendous opportunities regardless of the next interest rate decision.

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2022: Celebrating Silver Linings

Posted by Dana Funds Investment Team on Dec 21, 2022 7:55:50 AM

We’re days away from the ball drop in Times Square, champagne toasts, and New Year’s resolutions. However, for us, the year wouldn’t be complete without a message of gratitude and well wishes to our investors, partners and friends.

This year, our message focuses on some of the silver linings in what generally was a stormy year for stock and bond markets.

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Lessons Learned from the Crypto Craze and FTX Fallout

Posted by Dana Funds Investment Team on Dec 1, 2022 5:01:49 PM

“Only when the tide goes out do you discover who's been swimming naked.” –Warren Buffett

It often takes a black-swan event to uncover which market participants were taking excessive risk with their investment dollars. The sudden unwinding of FTX, the now infamous cryptocurrency exchange, resulted in massive losses for even the most sophisticated investors. Venture capital firms, private equity groups, high-profile celebrities, and so much retail money all trusted FTX and its founder and former CEO Sam Bankman-Fried (also known as SBF).

The collapse has shades of Long-Term Capital Management (LTCM), Enron, Lehman Brothers, and Bernie Madoff all rolled into one scandal. From highly-leveraged financial market wagers to astounding hubris to non-diversified holdings to outright fraud and theft, there are lessons we all can learn from FTX’s fall from (perceived) grace.

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U.S. Consumer Checkpoint: Healthy Signs, Dismal Sentiment

Posted by Dana Funds Investment Team on Nov 3, 2022 5:31:49 PM

Don’t ever bet against the American consumer. That’s how the saying goes, but Chair Jerome Powell at the Federal Reserve continues to take aim at the demand side of the economy. Despite a surge in interest rates that effectively began more than a year ago when the U.S. 2-year Treasury rate began to rise from near zero to above 4.3% by today, the labor market remains strong and excess savings among households is still robust. There have been some signs of consumer weakness as credit card usage is on the rise and pent-up savings balances from the pandemic are beginning to dwindle. Confidence, meanwhile, is lousy to say the least.

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Finding Relative Value in a Ruckus Investing World

Posted by Dana Funds Investment Team on Oct 6, 2022 4:04:48 PM

September lived up to its notoriously risky bill. Stocks got rocked, bonds were crushed, and major parts of the forex markets traded with the volatility normally seen in emerging market currencies. At Dana, we see this dip across equity markets as an opportunity for long-term investors. Higher bond market yields also offer the chance to own the right fixed-income securities at bargain prices. A case can be made, in fact, that now is one of the better times to be putting money to work in a properly allocated portfolio than at any other time in the last decade-plus.

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ESG Investing During An Energy Crisis

Posted by Dana Funds Investment Team on Sep 15, 2022 5:50:39 PM

An Energy Crisis Reveals a New Twist on ESG Investing

ESG investing continues to evolve. The world is coming around to the notion that it is not so simple as shunning companies that have significant oil, coal, and nuclear energy exposure. The ongoing and deepening energy crisis in Europe casts an unfortunate spotlight on the perils of too quickly moving away from important base load fuel sources for electricity generation. At Dana, we take a more nuanced approach to ESG investing. While we believe that clean power will emerge as a significant energy source that will shape our world in the years ahead, getting there is fraught with challenges — at home and abroad.

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Market Timing? Too Risky.

Posted by Dana Funds Investment Team on Aug 24, 2022 12:10:14 PM

We asked one of our senior portfolio managers, Mike Honkamp, about risk controls at Dana. His answer: by taking market timing out of the equation, he can focus on choosing the best stocks, quarter after quarter.


In our last post, we offered an overview of each step in our process and we promised to dive deeper on each one in future posts. Now we present the first step in building a resilient portfolio: removing market timing risk. Mike explains how we take market timing out of the equation with:

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Our Process is Our Superpower

Posted by Dana Funds Investment Team on Aug 4, 2022 12:14:35 PM

Asset managers are all sunshine and roses when the market is riding high, but in a bear market you need to understand how your manager is working for you. We want to share details about our disciplined investment process, because the market is experiencing high volatility and sudden downturns.

Our “superprocess” consists of quantitative modeling to rank potential investments and qualitative research into business models and management, while also integrating ESG factors. We add to this a disciplined adherence to sector and industry weightings so that we’re not unintentionally allowing human bias to affect your investments.

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ESG: Is It About Politics?

Posted by Dana Funds Investment Team on Jun 23, 2022 12:43:13 PM

Is there a concern that ESG puts a political lens on which investments we make? The concern is real, as both regulators and pension funds have attempted to dissuade investors from accounting for ESG factors by politicizing the issues involved. We believe there is resilience to be gained from monitoring ESG factors, and politics have nothing to do with it.

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The Nuns Were Onto Something: Dana’s ESG History

Posted by Dana Funds Investment Team on Apr 14, 2022 2:47:25 PM

With a 20-year history in ESG investing, Dana was one of the earliest entrants in the space. It all started with a request from a group of nuns.

Dana’s ESG story began at the tail end of 1999. We were working with a group of nuns who needed equity exposure. This group held zero equities in 1999, so we got them comfortable with moving into holding stocks, but they had some values-based controls that they wanted to place on their portfolio. They wanted their investments to align with their Catholic values, so they didn’t want to hold alcohol, tobacco or firearms companies. They needed to be sure there were no pornography publishers among their holdings. They’re nuns. It was a must for them and we understood.

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