Evaluating Active Managers’ Recent Performance and Downside Participation

Posted by Dana Funds Investment Team on Jun 14, 2019 9:10:08 AM

In S&P Dow Jones Indices’ most-recent annual report of active managers’ relative performance against their benchmarks, 2018 was a continuation of the same theme that has prevailed for much of the past decade: active managers struggled to beat their passive counterparts1. This included the fourth quarter when the S&P 500 fell over 13%. Many investors assumed active managers would shine during the long-awaited risk-off environment and were surprised when this didn’t play out accordingly.

“What’s different about 2018 was the fourth quarter volatility,” Aye M. Soe, a managing director at S&P and one of the authors of the report, told CNBC. “Active managers claimed that they would outperform during volatility, and it didn’t happen.”2

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How ESG Can Help Your Practice as an RIA

Posted by Dana Funds Investment Team on Jun 6, 2019 4:49:00 PM

For advisors, having the option to sit down and speak with a client about a topic that is important to them, but not strictly related to their investment performance, can be a very powerful tool. This is one of the benefits of having a strong Environmental, Social, and Governance (ESG) capability, especially since younger investors and women – two demographics quickly accumulating wealth – have shown such strong interest in the space. These robust conversations will also lead you to get to know your clients on a more personal level and potentially develop a level of trust that didn’t previously exist.

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Who’s Winning? Strategic Versus Tactical Investors

Posted by Dana Funds Investment Team on May 29, 2019 5:28:10 PM

Although volatility hasn’t been as pronounced as in past years (we recently penned a blog on this, “Chart of the Month – How 2019 Volatility Stacks Up Against Prior Years”), trade tensions and concerns over a slowing U.S. economy have caused enough concern for more-tactical investors to take some money off the table. One investor group in particular that has trimmed its long equity exposure is hedge funds.

Hedge funds typically employ nimble, tactical investment strategies, relying on portfolio managers’ experience and expertise or specific indicators to determine when to increase exposure in their long or short books. While these funds’ short positions and relative lack of equity beta (compared to a strategic long-term, long-only equity investor) was beneficial during 2018’s fourth-quarter selloff, the majority of hedge funds then missed out on the first quarter’s rally. 

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Three ESG Questions RIAs Should Be Asking Managers

Posted by Dana Funds Investment Team on May 23, 2019 2:06:49 PM
As RIAs put more and more thought into hiring managers who incorporate environmental, social and governance (ESG) concerns into their investment processes, the due diligence necessary to properly vet these managers has evolved.

Today there are many managers, even those not managing formal ESG strategies/funds, who claim to take ESG considerations into their investment processes.

Here are three questions you can ask as part of your due diligence:

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Chart of the Month - How 2019 Volatility Stacks Up Against Prior Years

Posted by Dana Funds Investment Team on May 15, 2019 2:23:57 PM

Just when we were getting used to some tranquility in the markets, U.S.-China trade tension reared its head again. While nothing compared to the dramatic volatility of late-2018, the chart below illustrates the recent pop in the VIX Index.

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A Tour of the World’s Economies and a Case for U.S. Equities

Posted by Dana Funds Investment Team on May 10, 2019 9:35:04 AM

It seems like the fourth quarter’s stock market selloff just happened yesterday, but we’ve already had a full recovery. Things have changed quite a bit - especially the Fed backing-off its intentions to continue raising rates. Let’s take the pulse of major world economies to see where things currently stand.

China is a good place to begin, since it’s the second-largest economy in the world - larger than the economies of Japan, Germany, and India combined. Most believe the economic statistics that come out of China are manipulated by their government. How else could Chinese GDP stay in such a narrow band between 6.4% and 7.0% for the last four years? The Chinese stock market may be a better indicator of economic health, and the Shanghai Shenzen stock index is near the same level it was four years ago. Many believe that the Chinese economy could get a big boost if the trade dispute with the U.S. is settled, but we have our doubts. It has gone on for a year now, and many U.S. companies have found ways to diversify their supply chains and lower their exposure to China. There is no reason they would put all of their eggs back in the China basket even if the trade dispute is resolved.

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How Successful Equity Investors Avoid Common Pitfalls

Posted by Dana Funds Investment Team on May 2, 2019 3:27:36 PM

Over the years, you may have noticed certain traits of successful equity managers, and certain other traits of managers that have disappointed. Here are some common characteristics we frequently see among equity money managers who have created strong long-term risk-adjusted track records for their clients.

Image Source: Explara.com


  1. Limiting big drawdowns. As we mentioned in a previous blog (The Arithmetic Behind Drawdowns and Recoveries) bouncing back from a big drawdown can take years, and the arithmetic is not in your favor (i.e. It takes a 25% gain to recover from a 20% loss). Buying undervalued stocks can help with this; their multiples tend to be lower which can help limit the downside.
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Investors Want ESG Investment Options in Retirement Plans

Posted by Dana Funds Investment Team on Apr 30, 2019 10:29:48 AM

Financial Advisor recently wrote an article on environmental, social and governance (ESG) investment options in retirement plans. Turns out a lot of investors want it and not a lot of companies are meeting the demand.

According to a recent survey from Natixis Investment Managers, sixty-one percent of respondents said they would be more likely to contribute or increase contributions to their workplace retirement savings plan if there were more socially-responsible investments. Among plan participants not currently invested in ESG funds, only 13 percent said their company’s retirement plan offers ESG options.

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What’s Trending? ESG Investing

Posted by Dana Funds Investment Team on Apr 17, 2019 10:06:54 AM

Wayne Gretzky, the great hockey player, said, “I skate to where the puck is going to be, not where it has been.” This quote certainly applies to Environmental, Social and Governance (ESG) and Socially Responsible Investing (SRI) investing.

Are you skating in the right direction?

The total US-domiciled assets under management using SRI strategies grew from $8.7 trillion at the start of 2016 to $12.0 trillion at the start of 2018, an increase of 38 percent. This represents 26 percent—or 1 in 4 dollars—of the $46.6 trillion in total US assets under professional management.

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What a difference three months can make….

Posted by Dana Funds Investment Team on Apr 12, 2019 11:52:27 AM

With the turn of a calendar, it appears all fortunes have changed for the better. 2019 has had a great start with the S&P 500 Index recovering from last year’s sell-off and rallying more than 13%, its largest first quarter gain since 1998. The sell-off, at the end of 2018, no doubt brought bargain hunters back to the market, softened the Fed’s stance on rate increases, and subdued fears of a near-term recession. Most of the recovery occurred in January. By mid-February, concerns returned about China trade disputes, Brexit, the Fed, and an inverted yield curve; but the S&P 500 Index continued higher, adding another 3.5% during the second half of the quarter. The Index now trades with a 16.3x forward price-to-earnings ratio and appears to be in line with historical averages given the current market environment. An improvement in earnings estimates may be necessary to see the market move materially higher from here.

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