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Monthly
Portfolio Commentary
We recently interviewed PIMCO's co-CIO and co-CEO Mohamed El-Erian. He describes the economic environment as a "morphing of disruptions" that began with subprime, then hit structured products more broadly and then migrated into high-quality instruments. The next disruption will be the overall economy. ...There are no changes to our model portfolios this month.  |
Fund
Reports
Harbor Capital Appreciation: Based on conversations with a variety of companies, the Jennison team concludes that growth is slowing all over the world. “If we’re not in a recession,” Segalas says, “it’s because of our exports.” He expects that, at least in the near term, corporate profits will be generally sluggish and fewer companies will be growing. ...In February 2008, we conducted an onsite due-diligence visit to Jennison’s New York office. We met with Blair Boyer, one of the four large-cap growth portfolio managers involved in portfolio decision-making, as well as four analysts. Subsequent to that visit, we had stock discussions with five more analysts in addition to our conversation with Segalas.
Old Mutual Emerging Growth: Walsh and Malouf say the U.S. economic slowdown they expected was accompanied by two surprises. The first was the timing of the credit crisis and the speed with which the stock market reacted to it. ...The second surprise occurred when the team saw fundamentals deteriorate at a few key companies.
Rainier Small/Mid Cap Equity; Rainier Large Cap Equity: Rainier Small/Mid and Rainier Large Cap both had strong relative performance across all sectors in 2007, including the two toughest sectors for the year—financials and consumer-discretionary—which underperformed the S&P 500 by 25 and 20 percentage points, respectively. Both portfolios benefited from being underweighted to these sectors, as well as from their stock selection in these areas. |
Middle East and African Equity Markets Update
Over the past few months, we have conducted research on Middle East and African (MEA) markets. Our research on these markets will continue, but we want to update subscribers on our findings thus far. |
Turner Concentrated Growth—Preliminary Report
In April, we added Turner Concentrated Growth Fund (TTOPX) to our Recommended list in the Larger-Cap Growth category, and also added the fund to our Equity model with a 6% weighting. Turner Investment Partners is a growth manager we have known and respected for eight years. Until recently, our coverage of Turner has centered on their sector-neutral strategies, which we have written frequently about, and we formally recommend three Turner-managed funds. Over the past two months we have conducted due diligence on Turner Concentrated Growth, a concentrated product that is not managed to benchmark sector weightings, but is run using the same investment process and philosophy: earnings expectations drive stock prices.
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Vanguard Growth Equity Removed from our Recommended List
We are removing Vanguard Growth Equity from our Recommended list in the Larger-Cap Growth category, and dropping the fund from our coverage. This decision follows Vanguard’s announcement to add a subadvisor whom we do not follow—Baillie Gifford—to the fund, which was formerly managed solely by Turner Investment Partners. Because we have several high-conviction options in the Larger-Cap Growth category, including Turner Concentrated Growth, a concentrated version of the former Vanguard Growth Equity, we do not have any plans to conduct due diligence on the new subadvisor. Vanguard did not disclose its reasons for adding the subadvisor nor their weighting in the portfolio, but we have noticed that Vanguard has been shifting towards a multi-manager approach. Twenty of Vanguard's 55 actively managed stock funds are now multi-managed. |
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