Conning's High Dividend Equity Strategy Continues to Serve Institutional Investors Well in Volatile Times
February 09, 2021
Firm’s 10-Year U.S. High Dividend Equity Strategy Track Record Outperforms Peer Strategies1,2
HARTFORD, CT – February 09, 2021 —According to Conning, a leading global investment management firm, high dividend equity strategies can serve institutional investors in this period of low interest rates by enhancing income and portfolio diversification along with the potential for capital appreciation. Conning’s U.S. high dividend equity strategy, which leverages the firm’s deep investment research capabilities, was introduced by Conning 10 years ago and had $1.75 billion3 assets under management at the end of 2020.
“While in recent years market returns have been driven by large cap technology names, we believe that a high dividend equity strategy focused on companies with strong balance sheets may provide an income opportunity in a low-rate environment, and may also offer an attractive combination of market upside participation and downside protection,” said Cindy Beaulieu, a Managing Director and Chair of the Investment Policy Committee at Conning.
Conning’s U.S. high dividend equity strategy has built incremental value for portfolios since 2011, generating an average annual 13.67% net return since inception, outperforming the MSCI USA High Dividend Yield Index by 138 bps.2, 4 The U.S. high dividend equity strategy's 10-year return and risk-adjusted return, as measured by its information ratio, both ranked in the top decile of the eVestment Alliance Dividend Focus Manager Universe.1, 2
“There are several reasons why institutional investors continue to be attracted to high dividend equity strategies,” says Don Townswick, Director of Equity Strategies at Conning. “For one, ultra-low bond yields generally raise the appeal of equity dividends. Other considerations are whether a market correction may be nearing. High dividend equities not only demonstrate lower volatility but also tend to outperform equity markets in down periods,” added Townswick.
Conning’s strategy employs a multi-stage quantitative screening process that narrows the S&P 500 Index to a target portfolio. The firm’s research team then performs a qualitative investment analysis, utilizing its extensive experience in fundamental analysis. The portfolio consists of 40 to 60 names which are equally weighted and diversifies exposures across industries to avoid the cyclicality of many high dividend strategies. In addition, Conning’s strategy focuses on companies with strong balance sheets in sectors that will allow them to maintain their dividend payouts in periods of economic uncertainty and increase dividends as the economy strengthens.
According to Conning, the benefits of its high dividend equity strategy include:5
- Dividend yields that are attractive relative to yields on fixed-income securities
- Potential for dividend increases and capital appreciation
- Tax savings for certain insurance companies due to the dividends-received deduction
- Diversification of risk
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For more information on Conning’s U.S. High Dividend Strategy, please see the fact sheet at this link.
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1 eVestment collects information directly from investment management firms and other sources believed to be reliable, however, eVestment does not guarantee or warrant the accuracy, timeliness, or completeness of the information provided and is not responsible for any errors or omissions. Performance results may be provided with additional disclosures available on eVestment’s systems and other important considerations such as fees that may be applicable. Not for general distribution and limited distribution may only be made pursuant to client’s agreement terms. *All categories not necessarily included; Totals may not equal 100%. Copyright 2012-2021 eVestment. All Rights Reserved.
2 Past performance is not a guarantee of future results.
3 Includes Conning, Inc. & Conning Investment Products, Inc.
4 Net-of-fees performance was calculated using a model fee of 40 bps, which represents the current fee schedule for this strategy. Conning’s High Dividend Equity strategy’s 10-year net return as of December 31, 2020 is 13.67%. The MSCI USA High Dividend Yield Index for 10 years ending December 31, 2020 is 12.29%. The MSCI USA High Dividend Yield Index is shown as reference. Returns have been annualized.
©2021 MSCI Inc. (MSCI). Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third-party involved in or related to compiling, computing or creating the data have any liability for an) direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.
5 Conning’s U.S. High Dividend Equity Strategy Primary Risks:
Market Risk – Market, or systematic, risk is the risk that individual stock returns may be correlated with general market downturns regardless of the particular business conditions and outlook for the individual stocks
Inflation Risk – Inflation erodes the purchasing power of future cash flows from investments. In times of high inflation the value of securities may be reduced
Liquidity Risk – Liquidity risk can occur when market conditions do not allow transactions to be made in a quick and orderly fashion in relation to indicative market prices
Conning, Inc., Goodwin Capital Advisers, Inc., Conning Investment Products, Inc., a FINRA-registered broker-dealer, Conning Asset Management Limited, Conning Asia Pacific Limited, Octagon Credit Investors, LLC and Global Evolution Holding ApS and its group of companies (“Global Evolution”) are all direct or indirect subsidiaries of Conning Holdings Limited (collectively, “Conning”) which is one of the family of companies owned by Cathay Financial Holding Co., Ltd., a Taiwan-based company. Conning has investment centers in Asia, Europe and North America.
Conning, Inc., Conning Investment Products, Inc., Goodwin Capital Advisers, Inc., Octagon Credit Investors, LLC, and Global Evolution USA, LLC are registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940 and have noticed other jurisdictions they are conducting securities advisory business when required by law. In any other jurisdictions where they have not provided notice and are not exempt or excluded from those laws, they cannot transact business as an investment adviser and may not be able to respond to individual inquiries if the response could potentially lead to a transaction in securities. SEC registration does not carry any official imprimatur or indicates that the adviser has attained a level of skill or ability.
Conning, Inc. is also registered with the National Futures Association and Korea’s Financial Services Commission. Conning Investment Products, Inc. is also registered with the Ontario Securities Commission. Conning Asset Management Limited is Authorised and regulated by the United Kingdom's Financial Conduct Authority (FCA#189316), Conning Asia Pacific Limited is regulated by Hong Kong’s Securities and Futures Commission for Types 1, 4 and 9 regulated activities, Global Evolution Fondsmæglerselskab A/S is regulated by Finanstilsynet (the Danish FSA) (FSA #8193), Global Evolution Fondsmæglerselskab A/S (London Branch) is regulated by the United Kingdom's Financial Conduct Authority (FCA# 479582) and Global Evolution Manco S.A. is regulated by The Commission de Surveillance du Secteur Financier (the Luxembourg FSA) (CSSF# S00001031). Conning primarily provides asset management services for third-party assets.
All investment performance information included in this document is historical. Past performance is not a guarantee of future results. Any tax-related information contained in this document is for informational purposes only and should not be considered tax advice. You should consult a tax professional with any questions. Dividends and other earnings are reinvested as part of a quarterly re-balancing program for portfolios that reinvest.
For complete details regarding Conning and its services in the U.S., you should refer to our Form ADV Part 2, which may be obtained by calling us.
©2021 Conning, Inc. This document is copyrighted with all rights reserved. Provided that appropriate credit is given to Conning as the source of the information, all or a portion of the information above may be distributed, reproduced, transcribed, transmitted, stored in an electronic retrieval system or translated into any language in any form by any means without Conning’s prior written consent. Conning does not make any warranties, express or implied, in this document. In no event shall Conning be liable for damages of any kind arising out of the use of this document or the information contained within it. This document is not intended to be complete, and we do not guarantee its accuracy. Any opinion expressed in this document is subject to change at any time without notice.
This document is for informational purposes only and should not be interpreted as an offer to sell, or a solicitation or recommendation of an offer to buy any security, product or service, or retain Conning for investment advisory services. The information in this document is not intended to be nor should it be used as investment advice.