Favourite US Equity Funds by Category

The Sharing Alpha initiative gives us the opportunity to find out which fund managers and funds are preferred by European advisors and fund selectors.

Investor Relations Specialist

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As every month, we analyse Sharing Alpha’s report on the funds preferred by European advisors and fund managers. This time, we have chosen to analyse the favourite US Equity funds in the list chosen by European advisors and selectors.

The Sharing Alpha initiative gives us the opportunity to find out which fund managers and funds are preferred by European advisors and fund selectors. Fund selectors are asked to rate funds according to their expectations based on three parameters (3 P’s):

  • The experience and competitive advantage of the fund manager and his team (People)
  • The cost of the fund (Price)
  • The way the strategy is executed in terms of risk management (Portfolio)

On this occasion, we had the opportunity to understand which are the favourite US Equity Funds from Fund managers and Fund selectors by category.

T. Rowe Price Blue Chip Growth Fund

Larry Puglia, Vice President, Portfolio Manager

What’s your investment style?

We aim to provide long-term capital growth by investing in leading companies in the industries that we believe are poised for long-term growth. We look for companies with attractive business models, operational and financial flexibility, and seasoned management teams with a history of thoughtful capital allocation. We believe these characteristics can lead to sustainable high earnings and free cash flow growth, which drives shareholder value. Bottom-up, fundamental research is key to identifying these successful long-term investments. In addition, we seek to avoid overpaying for growth and build diversified portfolios to help manage risk.

Where are you finding opportunities in the current climate?

The digitalization of a wide range of industries and markets has accelerated during the pandemic. Companies that provide the infrastructure for the online economy have seen demand for their services boom, allowing them to extend their dominance.

Within communication services, we have a position in Pinterest, a consumer application used for visual inspiration and product discovery. Its platform is entirely composed of user-generated content and therefore carries no cost for the company, which could enable significant margin potential. It under-monetized its meetings and cloud phone solutions to gain near-term market share, giving us incremental confidence in its ability to sustain its growth over the long term.

Lastly, we prefer companies that we think are on the right side of change and secular disruption. Leveraging our expertise gained over many years investing in e-commerce, we identify opportunities like Coupang and invest on behalf of clients where our mandate allows. Coupang is a leading South Korean e-commerce firm with a wide moat in logistics technology that offers consumers better merchandise selection, faster delivery, and lower prices than many of its competitors and, in doing so, continue to grow its market share. 

What’s your outlook for the US?

Unprecedented levels of stimulus and momentum behind vaccine distribution have fuelled this upward market movement, and, in our view, conditions appear supportive of further economic growth in the near term.However, if the high-quality companies we invest in can execute their long-term strategies and grow their cash flows rapidly, we remain confident in their potential to compound in value over a full economic cycle. With this in mind, we will continue to emphasize high-quality growth companies that we believe can continue to generate durable earnings and free cash flow growth in most economic and regulatory environments.

Janus Henderson Enterprise Fund

Brian Demain, Fund Manager 

We believe that investing in companies with sustainable growth and strong or strengthening competitive positions, purchased at sensible valuations, can drive consistent returns and allow us to outperform our benchmark and peers over time with moderate risk.

We seek to identify mid-cap companies with high-quality management teams and strong governance that wisely allocate capital to fund and drive growth over time. 

  • Emphasis on “smart growth” companies exhibiting sustainable growth and strong or strengthening competitive positions versus momentum companies with less visible longer-term drivers.
  • Seeks businesses that prudently invest capital to emphasize longer-term value creation and fund high-quality growth.
  • Differentiated time horizon relative to the market. By taking a longer-term view, we are able to invest in longer-term growth opportunities, which is evidenced by our low turnover.
  • Pursues a diversified approach in an effort to dampen volatility over time.

Robeco BP US Premium Equities

Duilio R. Ramallo, CFA, Fund manager

Robeco BP US Premium Equities is an actively managed all-cap fund that invests across market capitalizations, sectors and industries. The portfolio is built from the bottom-up through rigorous fundamental analysis focusing on companies which exhibit attractive valuation, strong business fundamentals, and improving business momentum.

Robeco BP US Premium Equities is an actively managed all-cap fund that invests across market capitalizations, sectors and industries. The portfolio is built from the bottom-up through rigorous fundamental analysis focusing on companies which exhibit attractive valuation, strong business fundamentals, and improving business momentum.

Robeco BP US Premium Equities outperformed the Russell 3000 Value Index in May, and continues to strongly outpace the index over the year, with strong stock selection and sector allocation adding to relative returns as U.S. equity markets favored value over growth and high multiple momentum driven stocks. Security selection was strong in most sectors, with consumer discretionary, communication services and Technology leading the way.  Underweight exposure, a fall-out from the bottom-up stock selection process, to utilities, communication services and real estate and overweight exposure to financials was also beneficial to the fund’s relative performance during the month.  

Looking ahead, there appear to be four open-ended questions that could impact markets in the short to medium term: Will the recent spike in inflation be transitory, cyclical, or secular? What size and shape will President Biden’s plans for spending and taxation take? Will the Fed begin tapering on its bond purchases, and when? And, without herd immunity at the national and global level, have we truly left Covid behind? On the positive side, it seems that the U.S. economy could continue to receive stimulus, as consumer spending changes from the acquisition of goods to that of services. The fund remains well positioned, with holdings that reflect the characteristics of all three Boston Partners circles: attractive valuations, strong business fundamentals and identifiable catalysts, which has proven to outperform the market over time.

Alger Small Cap Focus Fund

Amy Zhang, portfolio manager of Alger SICAV – Small Cap Focus fund

Through the Alger SICAV – Small Cap Focus fund we seek to offer investors access to what we believe are the most innovative small companies in the US.

With the strategy of this “best ideas” fund we aim to generate alpha through stock selection based on fundamental, bottom-up research and conviction. We are benchmark-agnostic investors with a distinctive approach to identifying and building a focused portfolio of small companies that have the potential to grow into large companies.

We define small companies by operating revenues instead of by market capitalization. We look for companies with operating revenue of less than $500 million at the initial point of investment. Also we invest in companies with sustainable and growing revenue streams that we believe have the potential to double in five years. We seek companies with defensible competitive positions and high financial quality (e.g., solid balance sheets and strong cash flow generation). We are patient, long-term investors with a 3-5 year investment horizon. The portfolio is generally comprised of 50 holdings and we expect it to be overweight to Health Care and Information Technology sectors.

The Fund’s Class I US shares have returned an alpha of 9.73 with a beta of 0.86 for the five-year period ended 30 April 2021. AUM is over $1B. 

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Favourite US Equity Funds by Category