The coronavirus pandemic market pullback created buying opportunities for active investors, says Wesley Johnston, portfolio co-manager for the Touchstone Sands Capital Select Growth Fund. He believes more opportunities lie ahead. But most important, maintains Johnston, it’s about “being there” (versus “getting there”).
That perspective shapes the strategy that entered the COVID-19 crisis with a portfolio cultivated by the Sands Capital Management team to represent innovative, leading growth businesses, ones in which it has built conviction over many preceding years of deep, fundamental research, seeking to understand the motivations of management teams, etc. Now, due to Sands Capital’s conviction in the businesses, they are forgoing any wholesale changes in the portfolio. Instead, the team might take advantage of dislocations in share prices to expand existing positions and purchase a select few new businesses deep in the research pipeline that now are available at more attractive prices.
Johnston shared his observations with Investor’s Business Daily:
- He foresees continued opportunities amid expected volatility in the 18 to 36 months ahead. Active managers should do a better job than passive managers of capitalizing on them, he believes.
- “No one knows exactly what trajectory the recovery will take. But I think it’s a very dynamic time and that presents opportunities for active managers, opportunities of the sort we haven’t seen since the last market crisis in 2009-2010.”
- As some businesses stumble and others excel in the months ahead, “the ability to sidestep those challenges and focus on companies that will become stronger is an advantage that active managers have versus [strategies that track] diversified benchmarks.”
For more information about the Touchstone Sands Capital Select Growth Fund, visit here.
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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.
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