Is Consolidation Among Asset Managers Good for the Client?

Posted by Dana Funds Investment Team on Oct 22, 2020 4:06:38 PM

Mergers and Acquisitions (M&A) activity among asset management firms is creating some investment behemoths. As these businesses scale up, we hope their clients are asking a critical question: What’s in it for me?

The consolidation wave running through the industry continued this month, with Morgan Stanley announcing it will acquire Eaton Vance, and Trian taking stakes in two large asset managers with the hopes they will merge. The announcements follow several other mega-deals in the past few years.

Too often, the touted benefits of these mergers seem focused on two factors: size and scale. But does bigger mean better for the client? As a small investment boutique, we admit we approach this argument with our own bias, but we see a few reasons clients may not benefit when their investment partners merge.

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Election Day Q&A: What are the Wildcards That Could Affect Markets This November?

Posted by Dana Funds Investment Team on Oct 15, 2020 3:45:19 PM

The presidential race may be polarizing, but both sides can agree on one thing: It at least has been compelling. The unexpected twists and turns over the past month have everyone anxiously awaiting November.

We’re anxious too. But as investors, we don’t just think about who we want to win. We try to think about what could happen in a range of different – and unexpected – outcomes. In this brief Q&A, we look at some of the factors investors should consider before November. The views are not a wish list of a particular election outcome or an endorsement of a party or candidate, just straight-forward things that advisors and other investors should think about:

What is the base case markets are pricing in about elections right now?

Markets, like polls, are predicting a win for Joe Biden. The general view is that he would be less business-friendly and that this could ultimately weigh on corporate profits. However, it’s likely that Republicans could still control the Senate.

It’s generally believed Republicans will pick up a Senate seat in Alabama. If that happens, Democrats would need to flip three seats to get to 50/50. The most likely are Maine, North Carolina, Iowa, Colorado and Arizona. We believe the market is currently hanging its hat on a Biden win, but that flipping three of those five would be a tall order.

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Reflections on Stocks’ September Swoon

Posted by Dana Funds Investment Team on Oct 8, 2020 3:47:36 PM

Stocks recovered some ground last week, but September was the roughest month for U.S. equities since stocks began rebounding from bear market territory in late March. Below are a few quick takeaways on the September swoon, what may lie ahead, and how we are investing:

  • Given the disconnect between Wall Street and Main Street, a correction wasn’t entirely surprising. In the spring, the question clients asked us most frequently was why stocks continued to drive higher, despite high unemployment and a clear downturn in economic activity.

    The short answer was that fiscal and monetary stimulus boosted markets and gave hope that the economy would rebound quickly. In September, investors may have woken up to the reality that the economic recovery will be uneven, and economic activity and data will probably move in fits and starts. An impasse in Congress around additional coronavirus relief has raised additional concerns about the economic recovery.
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Financial Sector Outlook: Are Unloved Financial Stocks Due for a Rebound?

Posted by Dana Funds Investment Team on Oct 1, 2020 9:05:35 AM

Editor’s note: Our financial sector outlook is the first in a regular series sharing our views on various sectors with advisors and consultants. 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.

Since the coronavirus pandemic began, few stocks have been as unloved as financials. But the same headwinds working against the sector could be setting it up for a rebound with a little more confirmation about the economy.

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Never Judge a Book by its Cover: Why Advisors Must Look Beyond ESG Labels

Posted by Dana Funds Investment Team on Sep 24, 2020 4:12:14 PM

Based on the following fund profiles, can you pick the ESG strategy?

Fund 1 (U.S. large cap blend category)

Morningstar Sustainability Rating: 5 Globes
Historical Sustainability Score Percent Rank: 11th
Historical Sustainability Score (lower score = lower risk): 22.16
Current Sustainability Score (lower score = lower risk): 22.33
ESG Breakdown (lower score = lower risk):

  • Environmental: 4.16
  • Social: 10.76
  • Governance: 7.40


Fund 2 (U.S. large cap blend category)

Morningstar Sustainability Rating: 3 Globes
Historical Sustainability Score Percent Rank: 40th
Historical Sustainability Score (lower score = lower risk): 23.52
Current Sustainability Score (lower score = lower risk): 23.32
ESG Breakdown (lower score = lower risk):

  • Environmental: 3.81
  • Social: 9.94
  • Governance: 7.08

Current Sustainability Scores based on 98% of AUM | Global Category: US Equity Large Cap Blend |3166 Funds in the Global Category | Sustainability Scores as of Jul 31, 2020. Sustainability Rating as of Jul 31, 2020.


Surprisingly, only Fund 2 has an ESG label. We won’t name the competitor but will simply point out that it comes from a large asset manager and that the fund has ESG in its title. The first fund is Dana’s own large-cap U.S. equity fund. If you didn’t judge by the title, it could easily be classified as an ESG strategy.

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Is the Growth-Value Divergence at a Turning Point?

Posted by Dana Funds Investment Team on Sep 17, 2020 4:04:49 PM

Growth stocks have continued a decade-long trend and massively outperformed value stocks for much of 2020, but in recent weeks performance has been more even. The change suggests many of the factors that propelled growth forward since the pandemic have been fully absorbed by the market. But is that enough to stage a changing of the guard for value investing?

This blog post reflects on what fueled the divergence between growth and value in recent months, what it will take to reverse value stocks’ fortunes, and why the recent economic downturn may turn out to be a positive change agent for some companies in value indices.

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Renewable Energy: Where Do We Go From Here?

Posted by Dana Funds Investment Team on Sep 10, 2020 3:14:50 PM

Renewable energy companies enjoyed considerable growth over the last decade, as the cost of solar and wind power technologies declined significantly. ”Renewables’ competitiveness with fossil fuels is strong, driven by considerable innovation, learning and economies of scale,” Lydia Miller, Portfolio Specialist at Dana Investment Advisors states in a recent Green Money Journal column. “We believe that the transition to a low-carbon economy is happening and will continue to happen. This happens over decades, with investors increasingly discounting this long-term trend.”

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Where are Advisors on the ESG Adoption Curve?

Posted by Dana Funds Investment Team on Sep 2, 2020 4:02:33 PM

To say ESG has hit an inflection point would be putting it mildly. Flows into sustainable funds quadrupled to $21.4 billion in 2019. The first half of 2020 has nearly eclipsed that mark, with flows totaling $20.9 billion, according to Morningstar figures. But amid this surging demand, where do advisors fit?

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Mind Boggling: Reflections on New S&P 500 Records

Posted by Dana Funds Investment Team on Aug 27, 2020 12:39:47 PM

The S&P 500 has hit new records in recent days, completing a round trip that has been remarkable, rapid, resilient … and risky.

In a span of just 126 trading days, the S&P 500 went from peak to new peak, with a 34% drop in between. Below we offer some short, but important, takeaways on how we got here, what investors should have learned, what we are concerned about, and how we are investing going forward.

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Should Your Client’s ESG Fund Be a Core Equity Holding?

Posted by Dana Funds Investment Team on Aug 19, 2020 4:02:33 PM

As client demand for ESG strategies grows, advisors have a tough job ahead of them: finding a strategy that is suitable as a core equity holding. Without proper due diligence on fund construction, a strategy used as a core holding may expose a client to unintended risks.

The details are all in the portfolio construction process.

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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.