Since the wave of new ESG (environmental, social and governance) specific and larger well-known data vendors rolled onto the ESG data scene, it has become more difficult for investors and asset managers to find any high-level of correlation between vendor ESG scores. In this blog we discuss some of the possible reasons for the differences in scores across companies and how users of these ratings might navigate these challenges to drive mission alignment, risk mitigation and alpha generation.
DANA INVESTMENT ADVISERS WINS FIRST PLACE (MONEY MANAGERS WITH 20-49 EMPLOYEES) IN PENSIONS & INVESTMENTS BEST PLACES TO WORK IN MONEY MANAGEMENT AWARD
New York, NY (December 10, 2018) – Dana Investment Advisers won the first place in money managers with 20-49 employees in the 2018 Best Places to Work in Money Management awards announced by Pensions & Investments today.
Presented by Pensions & Investments, the global news source of money management, sixth-annual survey and recognition program is dedicated to identifying and recognizing the best employers in the money management industry.
Large- and small-cap indices have fallen significantly since the end of September, in a correction that has caught many investors off guard. Recent darlings, such as Amazon and Netflix, fell over 20% and 30%, respectively, before finding support.
However, we really shouldn’t be surprised when stocks with P/E’s of 50 to 100 and year-to-date returns of 50% to 100% undergo a correction. These stocks should be expected to exhibit downside volatility that is similar to their upside volatility when their future growth rates are questioned. High P/E stocks are most sensitive to changes in their expected growth rates in the future. Also, all market trends typically both overshoot and undershoot their natural equilibrium points.
As more and more money has flowed into passive index funds and ETFs, there has been growing concern over the level of influence these providers, such as Vanguard and Blackrock, have in terms of proxy voting. Assets in passive products have ballooned, and passive portfolio managers have been forced to buy more and more shares of index constituents, resulting in them being among the largest shareholders of many publicly-traded companies.
In late August, headlines across financial news media read along the lines of “This is now the longest bull market in history!” While there is some argument around what defines a bull market, whether a large-cap or all-cap index should be observed, and other technicalities including Price Return versus Total Return (which includes dividends), it is safe to say that the market’s run since the Global Financial Crisis has been among the longest bull markets in history.
The U.S. economy continues to hum along. Corporate earnings remain robust, consumer spending is healthy and a tight labor market is supporting inflation, which is hitting the Federal Reserve’s target of 2%. Within the stock market, strong performance in a few narrow areas have largely driven the returns of popular indices such as the S&P 500.
Peter Lynch, the former manager of the Fidelity Magellan Fund, has a famous story about three cocktail parties he attended as the market was moving through different phases. At the first party, at a time when the market is down, he tells people he’s a mutual fund manager and they quickly walk away to go speak to a dentist. At the second party, when the market has been moving upward, people listen to him about stocks for a little while before losing interest and again seeking out the dentist. But at the third party, when the market has been rallying for a while, not only do people intently listen to him talk about stocks, but they give him stock recommendations of their own!
Nearly ten years after the Financial Crisis, we are at a precarious place. Corporate earnings are strong, but lofty equity valuations and rising interest rates present significant reasons for concern. Many investors and advisors are taking steps to protect capital when the market inevitably heads south.
Data from Morningstar Direct
Dana has been managing equity strategies since 1999 with an emphasis on minimizing volatility and improving the consistency of results. We believe this type of approach is as important as ever. If you share this view, please subscribe to our new blog to receive our latest market insights which we trust will be useful to you while making investment decisions.