“One technology focused fund is having its best year ever thanks to big positions in the companies benefitting the most from the coronavirus era.” So observed CNBC in an article highlighting the Touchstone Sands Capital Select Growth Fund.
“In periods of crisis or dislocation or extreme uncertainty, the market overreacts, it throws out the babies with the bathwater and that creates opportunities,” said co-portfolio manager Mike Sramek, CFA, with fund sub-advisor Sands Capital Management.
Surveying the investment landscape of 2020 and the fund’s actively managed approach to it, he noted that:
- In periods of “dislocation and disruption,” certain companies “tend to use these periods … to get even stronger … They use the disruption to their advantage … and emerge as better businesses. Typically that’s reflected in their stock prices.”
- Trends in place before the pandemic, such as growth in e-commerce and streaming media, are getting a boost as consumers adopt the technologies more quickly than planned.
- The fund invests in what it views as leaders in promising business spaces. Ones it believes to have competitive advantages, clear missions and strong management teams.
- It seeks companies with financial strength, little debt on their balance sheets and strong cash positions.
- Above-average earnings growth is another of the fund’s evaluation credentials.
- “We buy simple, easy-to-understand businesses where it’s simple [to ascertain] where the revenues are coming from and how those revenues translate to earnings and why that’s sustainable over a long period of time.”
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A Word About Risk
The Fund invests in equities which are subject to market volatility and loss. The Fund invests in stocks of large-cap companies which may be unable to respond quickly to new competitive challenges. The Fund invests in growth stocks which may be more volatile than investing in other stocks and may underperform when value investing is in favor. The Fund may focus its investments in specific sectors and therefore be susceptible to positive or negative developments in the sector which may increase the Fund’s volatility and magnify its effects on total return. The Fund is non-diversified, which means that it may invest a greater percentage of its assets in the securities of a limited number of issuers and may be subject to greater risks. A health crisis may negatively affect the worldwide economy, as well as the economies of individual countries, individual companies and the market in general in significant and unforeseen ways, which could adversely affect the Fund's performance, the performance of the securities in which the Fund invests and may lead to losses on an investment in a Fund. Current and future portfolio holdings are subject to risk. The Advisor engages a sub-advisor to make investment decisions for the Fund’s portfolio; it may be unable to identify and retain a sub-advisor who achieves superior investment returns relative to other similar sub-advisors.
Please consider the investment objectives, risks, charges and expenses of the fund carefully before investing. The prospectus and the summary prospectus contain this and other information about the Fund. To obtain a prospectus or a summary prospectus, contact your financial professional or download and/or request one on the resources section or call Touchstone at 800-638-8194. Please read the prospectus and/or summary prospectus carefully before investing.
Touchstone Funds are distributed by Touchstone Securities, Inc.*
*A registered broker-dealer and member FINRA/SIPC.
Not FDIC Insured | No Bank Guarantee | May Lose Value