However, the equity funds Romig tends to include in his portfolio tend to have something in common: they have a high active share. “Funds have to make up for their fees, and they only have a reasonable chance to do so when they are very active,” he says.
Growth and value
While the Clearbridge US Aggressive Growth Fund has underperformed its index recently, especially in the second half of 2015, Romig saw this as a buying opportunity. “We included the fund in November and added in December, and the reason the fund lost money last year is that two of the three themes it concentrates on, biotech and energy, performed very badly.” The fund has an exposure of more than a third to the healthcare sector, most of which is in biotech stocks. The fund’s largest holding, the biotech company Biogen, lost more than 25% of its value in the second half of last year.
Romig believes the fund will be able to bounce back in 2016, as valuations of both energy and biotech companies are at multi-year lows. “What distinguishes the fund from its peers, is that complements a growth strategy with a value component. It actively looks for companies which are both undervalued and have growth potential. That’s why it has the adjective ‘aggressive’ in its name.”
