Now may be the best environment for fundamental stock picking.
Every year seems to be a market for stock pickers, but Bofa Securities has upped the ante, saying 2024 could be a "stock picker's paradise."
A big question for investors this year is whether we can see a broader sector opportunity in the market, not just a handful of big tech companies.
The Big Seven made a big contribution to the market last year.
Broader market "breadth" means that there is a large number of people who are able to participate in the S&P 500.
In a research note, S**Ita Subramanian, head of U.S. and quantitative strategy at BofA, said that while the scope expansion is "elusive", there are reasons for optimism.
"Now may be the best environment for fundamental stock picking," she wrote. Public investment reflects higher interest rates and inflation than private investment, and its valuation is near record lows. ”
In addition, there are fewer and fewer analysts tracking listed companies**. "The average number of analysts tracked per team** has dropped from a peak of 21 in 1989 to about 17 today," she said. From 2014 to the present, the number of active large commons** has fallen by 40%. ”
This is good news for stock pickers, "because less attention means less efficiency, higher alpha alpha returns." She wrote.
This backdrop may provide a good basis for actively managed** managers' investments this year. This is always a high barrier to entry, as most actively managed** typically have lower returns than cheaper passive indices over the long term.
Morningstar's highly-rated active strategies include Fidelity Blue Chip Growth Fund, Oakmark, and PrimeCap Odyssey.
The 2023 four-star rating Fidelity Blue Chip Growth** achieved 556% earnings, making it one of the best-performing large growth** performers, outperforming 97% of Morningstar's peers**.
Robby Greengold, a strategist at Morningstar, said: "If semiconductors continue to go crazy as they did in 2023, this strategy will be particularly well positioned considering that it has one of the largest holdings in the semiconductor industry." "The latest data shows that about 17% of the assets are invested in semiconductor-related.
Samsung-rated PrimeCap Odyssey*** has underperformed in recent years, but Greengold noted that the ** is a long-term investor who sticks to his choice and has a level of due diligence when picking stocks"Second to none"。
Last year, the return was 21%, which was lower than and like-for-like.
Investors may not be able to gain significant exposure to the market's top stocks from any of the PrimeCap** strategies"Greengold said. Portfolio managers have taken a benchmark-agnostic approach to investing, "which has always been a disadvantage because stocks can easily outperform the rest of the market."
He noted that, unlike most***, PrimeCap** invests heavily in biotech companies.
Biotechnology has been a challenging area to invest in for most of the last decade," Greengold said. "But this is a particularly interesting area for active managers. ”
Despite last year's growth** being the most popular, the five-star Oakmark Investor** (Equity Value Strategy) had a stellar total return, with a 31% return last year, outperforming and 99% of its Morningstar peers.
Much of this performance was due to the strong performance of Google's parent companies Alphabet and Amazon. "The investment team may argue that they are not specifically looking for value"Greengold said. "They're looking for markets that are below their intrinsic value assessments, and these include those with high P/E ratios.
by Lauren Foster
Edited by Kang Guoliang
Copyright Notice: Barron's original article, without permission, may not**. For the English version, see "It's a 'Stockpicker's Paradise."’ these 3 funds could be winners.”
The content of this article is for informational purposes only and does not constitute investment and financial advice of any kind; The market is risky and investors should be cautious. ）