Market Insights

In May, an activist investment firm won three seats on Exxon Mobil’s board, marking one of the most expensive, and most closely watched, proxy fights in America. It was a big victory for a small activist investor owning only a fraction of Exxon’s total shares.

It also marked a victory for ESG investors. The activist firm, a hedge fund called Engine No. 1, relied on ESG-friendly institutional investors and ESG fund managers to secure enough votes to elect the new board members, who will encourage Exxon to pivot its business away from fossil fuels.

Disruption and innovation are the very fabric of the American economy. So it’s little wonder that investors get excited about disruptive trends.

But once in a while, it’s worth taking a pause to put current disruption and innovation in perspective. Not only because the statistics can be eye popping, but because they help investors see the bigger picture, and take a long term view with stocks.

With that in mind, we offer a few short, simple statistics that put a few recent innovative and disruptive trends in perspective. The innovations are well known, but the statistics offer perspective on how far the trends have come, and how far they can still push forward.

It’s now been a year since COVID-19 shuttered many businesses, forced stay-at-home orders for Americans, and upended every sense of normalcy. As we cross that one-year anniversary, Dana Investment CEO Mark Mirsberger reflected on the year, what it meant for asset management businesses, and what it might mean going forward.

As 2021 kicks off, we wanted to share a few blog posts that could help you and your clients navigate the coming year. These were among our most read blogs of 2020, but they continue to be relevant today.

The first reflects on the extreme concentration risk within the S&P 500 index. We believe this is an issue that will bear watching in 2021. The second offers several stats aimed at keeping clients invested through a bear market. We hope it provides a timeless reference guide for any client you have who may have trouble staying the course when volatility strikes. The third offers perspective on the historical divergence between growth and value stocks in recent years, which remains a topical issue.

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:

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

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.”

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?

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.

The future of the electric vehicle (EV) market has excited many ESG investors, and for good reason: It’s a classic example of an investment trend that has both substantial environmental benefits and significant growth potential. But for all the buzz, many investors may be viewing the opportunity set with too narrow a lens.

Most headlines and some retail investors associate electric vehicles with a single poster child company: Tesla. While Tesla’s history of innovation is indeed impressive, the investment opportunities that will stem from electric vehicle adoption and innovation are far more expansive.

This summer, with the help of our interns, we completed a deep dive into researching the growth potential of the electric vehicle market. A few takeaways demonstrate just how big the investment potential is, how fast the trend is moving and how far the investment opportunities expand: