As summer and the year’s halfway mark approach, investors see stock persistence paying off. Today’s advice comes from Morningstar’s 2024 “outstanding portfolio manager” Clare Hart, who will soon conclude her two-decade tenure as lead manager at JPMorgan’s Equity Income Fund (OIEIX).
Under her leadership, the fund has achieved a 9.4% annualized gain since 2004, outpacing Morningstar’s large value category and the Russell 1000 Value Index by over a percentage point.
Hart’s fund focuses on stocks that meet three criteria: quality, reasonable valuation, and dividend-paying. She values companies with reliable management, solid industry positions, and innovative potential. Examples include Philip Morris International (PM), pushing towards a “smokeless company,” and Procter & Gamble (PG), leading market innovation.
Hart also includes Big Tech, owning Microsoft (MSFT) and a reduced stake in Apple (AAPL) due to valuations. Financials form the largest part of her portfolio, with Wells Fargo (WFC) at the forefront.
Despite last year’s Silicon Valley Bank crisis, Hart saw opportunities in banking, believing Wells Fargo will emerge stronger post its Fed-imposed balance sheet cap.
Another financial holding, Charles Schwab (SCHW), weathered last year’s deposit base concerns, maintaining stability. Hart views Schwab as a solid long-term investment with robust online tools for investors.
Energy is also significant in Hart’s fund, with ConocoPhillips (COP) as the second-largest holding, alongside Chevron (CVX) and Exxon (XOM). Hart is bullish on energy, recognizing the ongoing transition from fossil fuels and the critical role these companies play in it.
As Hart prepares to hand over the fund in September to co-managers Andrew Brandon and David Silberman, she expresses one lingering concern: inflation. She observes consumers continuing to spend despite rising prices, anticipating that inflation fatigue could eventually impact the market.
