Author: Micah Weinstein

Lazard International Strategic Equity Fund Commentary – Q4 2021

Thesis

LISIX is a bottom-up, growth-based fund that completes the core satellite strategy within global equity. The fund is unique in that it focuses on individual stocks rather than markets and looks for reasonably priced companies with strong growth potential. We like LISIX because of the managers’ expertise in various market caps, geographies, and sectors which helps keep the fund diversified while providing strong upside and downside capture over time.

 

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Overview

In the fourth quarter of 2021, LISIX underperformed the benchmark (MSCI EFEA Index) by 349bps. Even with the volatility, the MSCI EAFE index closed near a high. As for the fund, exposure to names that were vulnerable to concerns around the normalization of economic activity caused performance to lag. Strong selection in Industrials, Consumer Discretionary, and Health Care contributed to returns, though.

 

Q4 2021 Summary

• LISIX returned (0.80%), while the MSCI EAFE Index returned 2.69%
• Contributors
• Kobe Bussan, Linde, Accenture, Suncor
• Detractors
• CAE, Ryanair, Suzuki, Medronic, Lojas Renner

 

 

 

 

 

2021 Performance Comparison

 

[Category Mutual Fund Commentary]

 

 

Micah Weinstein

Research Analyst

 

Direct: 617.226.0032

Fax: 617.523.8118

 

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com

 

Hartford International Value Fund Commentary – Q4 2021

Thesis

Serving as a satellite holding, HILIX is a value style fund that takes advantage names that have underperformed recently and are cheaply priced. The team generates alpha by finding companies with strong fundamentals that are overlooked during times of low consensus expectations. We like that HILIX takes advantage of extremes and gains exposure to less efficient market caps by having more holdings and moderate active bets.

 

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Overview

In the fourth quarter of 2021, HILIX underperformed the benchmark (MSCI EFEA Index) by 300bps. The quarter saw a spike in volatility due to the Omicron variant, increasing energy prices, supply chain disruptions, inflation, and other macro-economic factors. The fund’s underperformance was mainly driven by poor selection within Industrials, Health Care, and Consumer Discretionary, but was partially offset by Communication Services and Materials. Sector allocation also detracted from returns, specifically within Utilities and Communication Services, but slightly offset by Real Estate. Regionally, selection within the UK, and Developed European Union & Middle East ex UK weighed on returns, but was also slightly offset by selection in Japan.

 

Q4 2021 Summary

• HILIX returned (0.31%), while the MSCI EAFE Index returned 2.69%
• Top issuer contributors
• GREE, Inc., SoftBank Group Corp., Westpac Banking Corp., UniCredit S.p.A., WPP Plc
• Top issuer detractors
• Pax Global Technology Limited, HSBC Holdings Plc, GlaxoSmithKline plc, Japan Airlines Co., Ltd., Fresenius SE & Co. KGaA

 

 

 

 

 

 

 

 

 

 

 

2021 Performance Comparison

 

[Category Mutual Fund Commentary]

 

Micah Weinstein

Research Analyst

 

Direct: 617.226.0032

Fax: 617.523.8118

 

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com

 

Harding Loevner Emerging Market Fund Commentary – Q4 2021

Thesis

HLMEX utilizes fundamental research to find companies with strong quality and growth metrics that can be compared across the global landscape. By focusing on investments with competitive advantages, long-term growth potential, quality management, and corporate strength, HLMEX offers diversity to our EM allocation while generating alpha over the long run. We continue to hold the fund because of the team’s conviction in high quality companies and managed risk through diversification and evaluation.

 

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Overview

In the fourth quarter of 2021, HLMEX underperformed the benchmark (MSCI Emerging Markets Index) by 93bps. EM markets fell in the second half of the year as global inflation fears grew and a slowing to China’s growth occupied the space. Specific to the fund, poor stock selection in Financials and Communication Services detracted from returns. Strong selection in Consumer Discretionary and Utilities, and positive allocation helped performance, it was not enough to fully offset or overcome the negative returns from Financials and Communication Services.

 

Q4 2021 Summary

• HLMEX returned (2.17%), while the MSCI Emerging Markets Index returned (1.24%)
• Contributors
• Sector: Overweight to IT, underweight to Health Care and Consumer Discretionary
• Stocks: ENN Energy (China), Sunny Optical (China), EPAM (Eastern Europe)
• Detractors
• Sector: No exposure to Materials, Communication Services, Financials
• Stocks: Sberbank (Russia), XP (Brazil)
• Fund’s expense ratio dropped from 1.17% to 1.10% in Q3 2021

 

 

 

 

 

 

 

 

 

 

2021 Performance Comparison

[Category Mutual Fund Commentary]

 

 

Micah Weinstein

Research Analyst

 

Direct: 617.226.0032

Fax: 617.523.8118

 

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com

 

RBC Emerging Market Equity Fund Commentary – Q4 2021

Thesis

REEIX is driven through both top-down and bottom-up fundamental research that provides diversification within our full EM allocation. The fund looks for high quality companies across all market caps that have strong ESG scores. We like REEIX because of the consistent and repeatable process that allows the team to take advantage of companies with sustainable growth across all the Emerging Market (EM) landscape.

 

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Overview

In the fourth quarter of 2021, REEIX outperformed the benchmark (MSCI Emerging Markets Index) by 211bps. While the EM market reported losses largely due to poor performance in the Chinese stock market, the fund’s underweight to the region was a large contributor to the outperformance. Strong sector allocations also had a positive impact on performance, especially within Financials, Consumer Discretionary, and Communication Services. Security selection within Financials and a flight away from quality detracted from returns. Poor selection in India and South Africa also hurt performance.

 

Q4 2021 Summary

• REEIX returned 0.80%, while the MSCI Emerging Markets Index returned (1.31%)
• Contributors
• Tata Consultancy services, MediaTek, Sunny Optical, NARI Technology, absence of Pinduoduo
• Detractors
• Ping An Insurance, NCSoft, B3 SA, AIA Group, Infosys

 

 

 

 

 

 

 

 

 

 

 

2021 Performance Comparison

 

[Category Mutual Fund Commentary]

 

Micah Weinstein

Research Analyst

 

Direct: 617.226.0032

Fax: 617.523.8118

 

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com

 

Westwood SmallCap Fund Commentary – Q4 2021

Thesis

WHGSX is our only active manager in the small cap U.S. equity markets and applies a quality and value tilt to their investment strategy, holding between 60 and 80 companies. By utilizing bottom-up fundamentals and focusing on companies with strong balance sheets, high ROIC, and consistently high FCF yield, the fund generates alpha especially during market downturns. We continue to hold WHGSX because of the team’s ability to find cheap valued stocks in the small cap space enabling them to generate strong returns over the long run.

 

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Overview

In the fourth quarter of 2021, WHGSX outperformed the benchmark (S&P 600 Index) by 240bps. Optimism over Fed policy to tamp down inflation helped create enough of a tailwind to overcome inflation fears and Washington dysfunction. As for the fund, strong security selection across numerous sectors helped drive performance. The fund saw strength across cyclical, secular, defensive, and quality areas. Industrials and Health Care were the top contributors, while Information Technology and Consumer Discretionary were the top detractors.

 

Q4 2021 Summary

• WHGSX returned 8.04%, while the S&P 600 Index returned 5.64%
• The fund also made a few changes to positioning
• Bought Astec Industries – producer of equipment and components used in road building and materials processing
• Bought Duckhorn Portfolio – largest pure-play luxury wine company in the U.S.
• Bought Methode Electronics – a tier-1 automotive supplier focused on electrical components and power distribution
• Bought Rambus – provider of intellectual property to the semiconductor and memory industry
• Sold
• Avient, Great Western Bacorp, James River Group, National Storage Affiliates Trust

 

 

 

 

 

 

 

 

 

 

2021 Performance Comparison

 

[Category Mutual Fund Commentary]

 

Micah Weinstein

Research Analyst

 

Direct: 617.226.0032

Fax: 617.523.8118

 

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com

 

Applied Finance Select Fund Commentary – Q4 2021

Thesis

AFVZX serves as our active manager in the large cap “value” U.S. equity markets and follows a concentrated (50 companies) investment strategy that focuses on firm quality and valuation. By utilizing DCF models, bottom-up fundamentals, and holding sector weights that are equivalent to their benchmark (S&P 500 Index), the fund generates alpha over time purely through stock selection. We continue to hold AFVZX because of the team’s ability to compare stocks across all sectors which enables them to generate strong returns over the long run.

 

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Overview

In the fourth quarter of 2021, AFVZX underperformed the benchmark (S&P 500 Index) by 155bps. U.S. large-cap equities saw strong performance for quarter, especially in October and early November when news of an antiviral Covid pill was shared. Additionally, strong personal income growth and manufacturing data which pointed to a recovering economy helped drive equity markets. Supply chain bottlenecks and labor shortages still acted as a headwind, though. Inflation also disrupted optimistic sentiment and caused continued volatility in equity markets.

 

Q4 2021 Summary

• AFVZX returned 9.48%, while the S&P 500 Index returned 11.03%
• Top contributors
• Health Care: Pfizer, McKesson
• Communication Services: Alphabet
• Energy: Chevron
• Materials: CF Industries
• Top detractors
• REITs: Host Hotel & Resorts
• Consumer Discretionary: Target, Darden Restaurant
• Information Technology: Intel Corp, International Business Machines Corp, Fiserv, MasterCard
• Financials: Capital One Financial Corp, The Allstate Corp

 

 

 

 

 

 

 

 

2021 Performance Comparison

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Category Mutual Fund Commentary]

 

 

Micah Weinstein

Research Analyst

 

Direct: 617.226.0032

Fax: 617.523.8118

 

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com

 

Atlanta Capital Focused Growth Commentary – Q4 2021

Thesis

EILGX serves as our active manager in the large cap “growth” U.S. equity markets and follows a concentrated (20-30 companies) investment strategy with a heavy quality tilt emphasizing companies with high ROIC, strong cash flow multiples, and long-term moats. By utilizing DCF models and bottom-up fundamentals, the fund finds stocks with secular tailwinds, sustainable financials, and relatively low downside capture to generate alpha over the S&P 500 Index over time. We continue to hold EILGX because of the team’s ability to build a concentrated portfolio that gives our U.S. large-cap allocation a strong quality tilt, while giving clients strong risk-adjusted returns.

 

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Overview

In the fourth quarter of 2021, EILGX underperformed the benchmark (S&P 500 Index) by 72bps. Even though inflation and Covid-19 threatened to disrupt returns, U.S. large-cap markets still saw strong returns. This is largely due to positive anticipation for an ongoing recovery and Fed action to mitigate inflation impacts. Specifically related to the fund, underperformance was mainly driven by negative sector allocation in Health Care and Information Technology. Stock selection also detracted from total return.

 

Q4 2021 Summary

• EILGX returned 10.35%, while the S&P 500 Index returned 11.07%
• Top contributors
• Stock selection within Health Care, Financials, Communication Services, and Consumer Discretionary
• Overweight to Materials
• Top 5 stocks: Zoetis Inc., Thermo Fisher Scientific, Inc., Amphenol, lack of exposure to Amazon.com, Inc., and Paypal Holdings
• Top detractors
• Stock selection within Information Technology, Real Estate, Materials, and Industrials
• Underweight to semiconductor and technology hardware
• Overweight to Health Care and underweight to Information Technology
• Worst 5 stocks: lack of exposure to Tesla, Apple, Inc., NVIDIA, Inc., Visa, Inc., and Fiserv

 

 

 

 

 

 

 

 

 

 

2021 Performance Comparison

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Category Mutual Fund Commentary]

 

Micah Weinstein

Research Analyst

 

Direct: 617.226.0032

Fax: 617.523.8118

 

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com

 

TIAA-CREF Real Estate Fund Commentary – Q4 2021

Thesis

TIREX utilizes fundamental research to find properties in high barrier markets, with higher occupancy and rent growth. By focusing on quality companies and avoiding unnecessary risks, the fund obtains a strong track record that has outperformed the benchmark and REIT ETF over time. We continue to hold TIREX because of the team’s growth focus with asset concentrations in supply constrained markets. Lastly, TIREX was the lowest cost active manager screened, at 49bps.

 

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Overview

In the fourth quarter of 2021, TIREX underperformed the benchmark (FTSE Nareit All Equity REITs Index) by 62bps, almost entirely due to a single position: GDS Holding. During the quarter, the fund reduced the number of holdings as valuations became extremely elevated around Covid-sensitive property types and regions (ie. lodging and resorts). Inflation-sensitive properties like health care were also reduced. Most of these sells were reallocated towards industries that are expected to strongly rebound in a post-pandemic world, such as manufactured homes and shopping centers.

 

Q4 2021 Summary

• TIREX returned 15.55%, while the FTSE Nareit All Equity REITs Index returned 16.17%
• Contributors
• Industrial REITs Rexford Industrials Realty, Inc. and Terreno Realty Corp.
• Regional mall REIT Simon Property Group, Inc.
• Detractors
• China-based data center GDS Holdings Ltd.
• Not owning industrials REIT Duke Realty
• Australian-based industrial housing REIT Ingenia Communities Group

 

 

 

 

 

 

 

 

2021 Performance Comparison

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Category Mutual Fund Commentary]

 

 

 

Micah Weinstein

Research Analyst

 

Direct: 617.226.0032

Fax: 617.523.8118

 

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com

 

Eaton Vance Floating-Rate Fund Commentary – Q4 2021

Thesis

EIBLX (yielding 3.15%) is a large floating rate fund that has strong historical returns and a tenured management team. By investing purely in senior bank loans, EIBLX further increases our potential upside gain, reduces our duration-risk, and decreases our interest rate risk. We like that the fund utilizes a bottom-up investment process through proprietary framework analysis, avoids high-yield corporate bonds, and allocates to relatively higher-rated securities within the floating rate security space.

 

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Overview

In the fourth quarter of 2021, EIBLX underperformed the benchmark (S&P/LSTA Leveraged Loan Index) by 26bps. Loan markets in general saw prices ease on October and November, but a strong and quick rally in December as Omicron fears started to fade and interest rate hike talks made headlines. Q4 2021 was also a record quarter for supply and demand which helped drive strong performance – CLOs specifically broke records. Credit also remained healthy with the default rate ending the year near a record low.

 

Q4 2021 Summary

• EIBLX returned 0.51%, while the Leveraged Loan Index returned 0.77%
• Quarter-end effective duration for EIBLX was 0.36 and 0.12 for the Leveraged Loan Index
• Largest contributors
• Overweight to a specialty chemicals company and out-of-benchmark holding in a recovering metals/mining issuer
• Largest detractors
• Overweight holding in an energy company and overweight to a radio & television credit

 

 

 

 

 

 

 

 

 

2021 Performance Comparison

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Category Mutual Fund Commentary]

 

 

Micah Weinstein

Research Analyst

 

Direct: 617.226.0032

Fax: 617.523.8118

 

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com

 

Fidelity Advisor Floating Rate Fund Commentary – Q4 2021

Thesis

FIQSX (yielding 3.26%) is a large, floating rate fund that has strong historical returns and a tenured management team. By investing purely in senior bank loans, FIQSX further increases our potential upside gain, reduces our duration-risk, and decreases our interest rate risk. We like that the fund utilizes a bottom-up investment process through proprietary framework analysis, avoids high-yield corporate bonds, and allocates to relatively higher-rated securities within the floating rate security space.

 

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Overview

In the fourth quarter of 2021, FIQSX performed roughly in line with the benchmark (S&P/LSTA Leveraged Loan Index). In general, loans saw stronger performance than high-yield corporate bonds, IG corporate credit, and other broad-based IG markets. Issuance reached an all-time high in October which was matched by high demand from CLOs and retail funds. November then saw a slight drop, but a strong rebound in December largely due to Omicron concerns. Headlines around rising interest rates also sparked demand for floating rate securities which helped drive performance.

 

Q4 2021 Summary

• FIQSX returned 0.79%, while the Leveraged Loan Index returned 0.77%
• Quarter-end effective duration for FIQSX was 0.16 and 0.12 for the Leveraged Loan Index
• Largest contributors
• Murray Energy (coal mining), Rivian Automotive (EV manufacturer), not owning Envision Healthcare (health-care service provider)
• Largest detractors
• Out-of-benchmark holding in TNT Crane & Rigging (crane service provider), Sinclair Broadcast Group (TV station operator), Rodan & Fields (skin case company)

 

 

 

 

 

 

2021 Performance Comparison

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Category Mutual Fund Commentary]

 

 

Micah Weinstein

Research Analyst

 

Direct: 617.226.0032

Fax: 617.523.8118

 

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com