Benchmarks don’t define outcomes. How well do you know what’s inside your passive investments?
If you’re looking to avoid a beta bubble, here are a few facts you should consider before deciding to invest.
When did passive investing become a bet on interest rates?
Passive investments are strongly tied to interest rates. This can lead to a number of unintended consequences:
Active Managers tend to be underexposed to yield factors (and likely for good reason given asset allocation demands.)
Illiquidity is a rising issue, particularly in small caps, as indiscriminate passive flows bid up low-quality stocks equally.
Rising interest rates create better decisions regarding returns on capital as the cost of capital rises for companies and lesser business models suffer disproportionately to higher quality businesses.
Take Action: Learn More About Our High-Conviction Approach to U.S. Equities
We believe high-quality businesses that are operating well with undervalued earnings potential offer competitive risk-adjusted returns.
Focused best ideas portfolio with historically high active share. Number of securities typically ranges from 50 to 70.
Our strategy utilizes a team-based fundamental bottom-up approach to identify high-quality companies.