As the broad market indexes hover around fair-value levels, the environment is ideal for precise stock selection, according to Brian Lazorishak, manager of the Chase Mid-Cap Growth Fund Ticker:(CHAMX).
“We've just come through a period where virtually every company has been able to grow earnings,” he said. “That probably won't be the case going forward, but there will be companies that will be able to continue to grow earnings.”
That reality, Mr. Lazorishak said, is what will help differentiate active money managers from the indexes.
“We're still able to find companies that have tremendous potential,” he said. “And that's important because I think we're heading into more of stock-picker's market.”
The fund was launched in 2002, but the strategy has been in place as a separate account since 1994 at Chase Investment Counsel Corp., which has $1.4 billion under management.
The strategy begins with a quantitative analysis that looks for characteristics such as relative price strength and earnings momentum.
From there, the bottom-up fundamental research takes over.
The portfolio of about 45 stocks is “sector agnostic,” Mr. Lazorishak said.
The fund is currently about 30% weighted in technology and 20% weighted in consumer discretionary stocks.
The fund is underweight energy because valuations have gotten too rich, said Mr. Lazorishak, who described the strategy as growth at a reasonable price, or GARP.
The GARP focus is somewhat unique for the mid-cap category, where most managers tend to favor more of an aggressive growth style.
While the fund is light in the financial sector, the portfolio does own both Affiliated Managers Group Inc. Ticker:(AMG) and
Stifel Financial Corp. Ticker:(SF).
Among what Mr. Lazorishak described as “boring technology names,” there are BMC Software Inc. Ticker:(BMC) and Fiserv Inc. Ticker:(FISV).
Slightly more aggressive holdings include Informatica Corp. Ticker:(INFA) and Netgear Inc. Ticker:(NTGR).
The fund has gained 14.5% from the start of the year, compared with a 6.4% gain by the S&P 500 over the same period.
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