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.

Despite stretched valuations we remain fully invested.

We understand the inherent risk at lofty valuation levels, however, we are confident in our proprietary model-based approach that focuses our research efforts on relative value and improving or deteriorating trends within market sectors, industries and individual companies. This approach informs our stock selection process, highlighting opportunities even as overall valuation levels are perhaps unsavory. Thus, we are able to maintain a fully invested, diversified portfolio, at a discount to the overall market that we believe is well positioned for the current environment.  

While we don’t know how long this rally will continue, we will ensure that our portfolios will participate by being fully invested, yet always diligent in looking for opportunities to improve our holdings.


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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. 

Diversification does not ensure a profit or guarantee against loss.  The Case Schiller P/E Ratio (CAPE) is a cyclically adjusted price-to-earnings ratio defined as price divided by the average 10 years of earning, adjusted for inflation.  It is usually applied to the S&P 500 equity market.  The CRSP US Total Market Index is comprised of approximately 100% of the investable US stock market.  Its companies, which represent a cross-section of market capitalizations, primarily trade on the NYSE and NASDAQ.  The FTSE All-World Ex-US Index tracks approximately 2,220 large and mid-capitalization stocks in countries around the world, including both developed and emerging markets, but excluding the United States.  The BloomBarc US 5-10 Year Credit Index is composed of US dollar-denominated bonds that are rated either investment-grade or high yield with remaining effective maturities between five and ten years.