This would be a fund that would not come onto many people’s radars and for good reason. Over the past ten years investors would likely have been better to buy the index. Not holding names like Apple, Microsoft, Amazon, Alphabet and Facebook would have put you at a disadvantage, and then there is a style bias where everything has been about growth. This strategy is a value strategy and therefore it has been hit by two negatives. However, the managers believe things are changing, especially since early November, and the rotation to value is benefiting their fund.
One of the debates we have is whether buying the index is the right thing for the next 10 years. It is unlikely that the big growth companies will peg back but they could tread water and therefore returns could be driven through other areas.
If this is the case, then the question is where you create returns in this market. This strategy looks for those companies that have had periods of underperformance, are unloved, and appear to have no recovery potential. On a stock specific basis, they look at companies that have strong upside potential but also they look at the downside….read more