When it Comes to Analyzing Stocks, A Bond Background Doesn’t Hurt

Posted by Dana Funds Investment Team on Feb 25, 2021 3:39:30 PM

With equity markets at all-time highs and many businesses still struggling due to a pandemic, it seems reasonable to ask: What could possibly go wrong?

At Dana, that question is a fundamental aspect of our research process, and something we spend a lot of time thinking about before any stock makes it into our portfolios. That type of risk awareness stems largely from our roots as a fixed income manager.

In a recent Q&A, our CEO, Mark Mirsberger, explained how a fixed income background has informed our approach to equities, and led to a focus on higher-quality stocks for our strategies. A brief snippet of that interview is below:

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Tech Sector Outlook: Look Beyond FAANG

Posted by Dana Funds Investment Team on Jan 21, 2021 5:12:19 PM

Editor’s Note: Our technology sector outlook is part of a regular series sharing our views on various sectors. 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.

 

For much of 2020, gains in broad indices were largely concentrated, as a few mega-cap tech companies dominated performance. The FAANG stocks, or as they are grouped more recently, FAANMG (Facebook, Amazon, Apple, Netflix, Microsoft and Google) enjoyed heady returns while most other stocks trailed significantly.

True, some of these stocks fall in the consumer discretionary sector, but for all intents and purposes, they share a common thread: dominant technology platforms that individuals have relied upon heavily during the pandemic.

In 2021, opportunities in the technology sector could widen. This blog looks at a few of the additional bright spots, a few potential headwinds for pockets of the tech sector, and how we are navigating the current environment.

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Attn Advisors: An Asset Managers’ Culture May Impact Your Client’s Experience

Posted by Dana Funds Investment Team on Jan 14, 2021 3:57:36 PM

At Dana, we were pleased to end 2020 with some positive recognition, making Pensions & Investments’ list of best places to work for the ninth straight year. We celebrate that news, and are sharing it with our clients, for a simple reason: Culture matters.

In our view, a positive work culture doesn’t just benefit employees within a company. It also translates into a better client experience. This is likely true for any industry, but we believe it’s particularly important to asset management.

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Taking Stock of 2020: Reflective Questions for Advisors and Clients

Posted by Dana Funds Investment Team on Dec 10, 2020 4:19:30 PM

If there were ever a year to have a reflective conversation with clients, 2020 is it. From the virus, to market volatility to election uncertainty, the year has been filled with tensions. The end of the year provides a natural opportunity to reflect on those issues and make both a portfolio - and a client relationship - stronger.

If you’re an advisor going through year-end meetings with clients, we wanted to provide a few questions, suggestions and resources that may help your clients reflect on 2020 and stimulate deeper conversations. We know the vast majority of advisors will cover these issues in some shape or fashion, and have the pulse on their own clients more than anyone. But given how unusual 2020 has been, it never hurts to think of new ways to ask reflective questions.

In the spirit of sharing, here are a few items that may help you and your client reflect on a year of upheaval. We hope you find them useful heading into the new year:

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For Markets, What Comes After Election Results and Vaccine?

Posted by Dana Funds Investment Team on Nov 20, 2020 2:18:21 PM

In the past two weeks, investors got a lot more clarity on two of the largest clouds hanging over the market: the U.S. election and the coronavirus.

We now know who the next president is, and have a better idea (Georgia’s Senate election notwithstanding) of what the balance of power will look like in Washington D.C. And news that Pfizer’s coronavirus vaccine has shown a high success rate offers hope that we may be on the path toward addressing the coronavirus pandemic and normalizing the economy, even if current infection spread is alarming.

In this brief Q&A, Dana portfolio managers Joseph Veranth and David Weinstein reflect on what the election and vaccine could mean for markets going forward

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Are Small Caps Poised to Outpace Large Caps Again?

Posted by Dana Funds Investment Team on Nov 4, 2020 4:28:51 PM

Large cap stocks have outperformed small caps since the pandemic, but smaller stocks have begun to close that gap in recent weeks. It’s still early, but if investors stay patient, we believe small caps could be poised to continue to outperform in the coming quarters.

This blog post explores what was behind small cap underperformance in prior months, and why smaller stocks may outperform going forward, particularly when we receive clearer indicators of an economic rebound.

In Initial Months of Pandemic, Mega Caps Enjoyed Mega Dominance

Large caps’ outperformance over small caps in the spring and summer was due largely to the very largest stocks in the indices, a trend we noted in prior blogs. Many of the largest companies by market cap are tech stocks, and their revenue streams were naturally resistant to the pandemic and a stay-at-home lifestyle. Individuals still need Microsoft to work from home, for example, and relied on Amazon for delivery more than ever before.

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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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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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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.