Phillip Davidson, SVP, Executive Portfolio Manager, American Century Investments joined Julie Cooling, Founder & CEO, RIA Channel to discuss the shifting market factors behind value’s recent rally, and why value could be poised to outperform growth for the first time in over a decade.
Historically, value has performed relatively well in market downturns. In 2020, this pattern was flipped on its head when high growth tech stocks soared in the stay at home economy, while traditionally stable, but slow-moving value plays like financials, energy and industrials lagged behind. Davidson says, Pfizer Day, the day Pfizer’s successful vaccine trial was announced, changed everything. Since November 9th, value has outperformed growth and industries that were hardest hit during the pandemic, have rebounded. Looking ahead, Davidson cites rising interest rates, inflation, and the United States’ accelerating GDP growth as key indicators of value’s position overgrowth.
American Century’s Equity Income strategy, led by Davidson, seeks to invest in high quality, undervalued companies, that have the potential to deliver income and long-term capital growth. By prioritizing quality over value, the fund seeks to avoid value traps and fundamentally at risk companies. The income-focused equity strategy also incorporates non-common securities to help reduce volatility and increase yield.
Phillip N. Davidson is a senior vice president and executive portfolio manager for American Century investments®. Mr. Davidson, who joined the company in 1993, oversees the teams that manage the company’s value equity portfolios. He is a member of the Investment Oversight Committee, Products & Markets Committee and the Investment Management Senior Leadership Team. Prior to joining American Century Investments, Mr. Davidson was vice president and equity portfolio manager for Boatmen’s Trust Company in St. Louis. During his 11 years at Boatmen’s, he specialized in the management of institutional equity accounts using a value-oriented investment style. He has worked in the financial industry since 1980. Mr. Davidson holds a bachelor’s degree in business administration and a master’s degree in finance from Illinois State University. He is a CFA® charterholder and a member of the CFA Institute.
To learn more, register & watch American Century’s webcast: The Search for Quality and Value in Tech and Healthcare.
Fueled by low GDP growth, low interest rates and low inflation, growth stocks overpowered value investing for most of the last decade. But positive vaccine results in early November turned the tables. Strong security selection will be a key performance driver as return dispersions widen in many sectors. Join Brian Woglom, Senior Portfolio Manager, and Nathan Rawlins, Senior Investment Analyst, for an in-depth discussion on how value investing can help investors generate income, build capital and effectively manage downside risk in today’s market. Discussion Topics Include:
- What has driven the recent value rally
- Why quality remains important in today’s environment
- Where high-quality value opportunities are in tech and healthcare
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