Bob Doll puts his money where his mouth is

Nuveen's chief equity strategist Bob Doll isn't just making a list of 10 predictions. He's created an investable portfolio of stocks based on those predictions. Jeff Benjamin has the details.
MAR 18, 2014
Robert Doll, Nuveen Asset Management's chief equity strategist and senior portfolio manager, is putting his money where his mouth is. The well-known and well-respected strategist has been issuing a list of predictions every year for some time but Tuesday, for the first time, Nuveen is launching an equity unit investment trust based on Mr. Doll's 2014 economic predictions. “It is basically one guy's opinion expressed in 10 different predictions and a portfolio that will do well if those predictions are correct,” Mr. Doll said in summing up the unique strategy. “I didn't create predictions that fit a portfolio,” he added. “I created a portfolio and then applied it to the predictions.” (See Mr. Doll's 10 predictions for 2014.) The Nuveen 2014 Equity Outlook Portfolio (INNEOX) is structured as an evenly weighted 25-stock portfolio that will mature and liquidate on April 10, 2015. Mr. Doll picked the 25 stocks that will be held for the entire period to reflect investment themes of his predictions, and the objective is to outperform the Russell 1000 Index over the 15-month investment horizon of the trust. InvestmentNews caught up with Mr. Doll to dig into his predictions and the portfolio. InvestmentNews: You predicted that the U.S. economy will grow by 3% in 2014 as housing starts surpass one million and private employment hits an all-time high. Would you consider that a bullish outlook, and where are the investment opportunities? Mr. Doll: I guess it's bullish if you can call 3% growth bullish. We are looking for a better economy, and the kinds of stocks that will do well in a better economy are Delta Air Lines [Inc.] (DAL), International Paper Co. (IP), and Macy's [Inc.] (M). IN: What is your outlook for Treasury bond yields now that tapering has officially begun? Mr. Doll: I think the 10-year Treasury yields will move toward 3.5% as the Federal Reserve completes tapering in 2014. Now that they've started tapering, you would have to be bearish to think it will get dragged into 2015 and beyond. IN: What's your outlook for equities? Mr. Doll: It will be another good year, despite a 10% correction. In other words, it will be a very normal year. Last year was abnormal because it was a strong year for stocks but it was also a nonvolatile year. In a year like I'm expecting, you will want to own defensive names like tobacco company Lorillard [Inc.] (LO), Pfizer [Inc.] (PFE), and Verizon Communications [Inc.] (VZ). IN: I noticed you also like high-yield municipal bonds to lead the fixed-income space. What's the logic there? Mr. Doll: The thinking is Puerto Rico and Detroit, et. al., have created negative sentiment for munis, and that is creating a big spread. But, in fact, munis in general are in great shape. Remember that municipalities have to balance the books, so you have a lot of municipalities that are now running surpluses. IN: Why do you believe 2014 will favor active managers over index funds? Mr. Doll: The correlations within the market are falling, just like asset classes are differentiating. Starting in the second half of 2013 for the first time in a while, active funds outperformed indexes, and that will continue. As a portfolio manager, I know that when correlations rise, I struggle and when correlations fall, there is more wind at my back.

Latest News

Names of more B-Ds that sold deals of bankrupt Inspired Healthcare surface
Names of more B-Ds that sold deals of bankrupt Inspired Healthcare surface

Broker-dealers that sold the defunct securities backed by Inspired Healthcare generated more than $100 million in fees and commissions.

MetLife poll finds high-value home sales are becoming tax-planning events
MetLife poll finds high-value home sales are becoming tax-planning events

A new MetLife survey finds real estate professionals are increasingly steering clients toward tax experts as rising property values leave more sellers facing significant capital gains.

Kestra adds Raymond James recruiter to expand advisor hiring push
Kestra adds Raymond James recruiter to expand advisor hiring push

The independent broker-dealer expands its business development bench with a new recruiter and an internal promotion in the West.

Cerity Partners names Will Peng chief innovation officer
Cerity Partners names Will Peng chief innovation officer

The leading ultra-high-net-worth RIA joins other large wealth firms, including Raymond James and LPL, in creating executive roles focused on artificial intelligence strategy

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.