Quick Take: Portfolio manager Duncan Evered joined the AXP Equity Select Fund/A (INVPX) with Paul Rokosz in February 2000, just before the stock market peaked and began falling.
While the $1.8-billion fund has bounced up and down over the last three years, it has stayed ahead of its peers most of the time. AXP Equity Select lost 5.5% on average, versus a loss of 14.3% for similar funds, for the three years ended last month. For the five-year period ended in May, the portfolio rose an average annualized 2.5%, versus 0.7% for its peers.
Evered, who hunts for growth stocks, has reemphasized mid-sized companies in the portfolio since taking over the fund, which he now runs solo. Rokosz began piloting the AXP Strategy Aggressive Fund/A (ISAAX) a year ago.
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For investors, it was the best of times, but it was about to become the worst.
When Duncan Evered joined the AXP Equity Select Fund in February 2000, stocks were peaking. A month later, the technology bubble burst, setting the stage for a three-year bear market.
As luck would have it, Evered began shedding many of the fund’s tech and telecommunications stocks when he came on board and before they began spiralling downward.
Although holdings like Cisco Systems (CSCO), Intel Corp (INTC), and Nokia Corp ADS (NOK) had been long-term winners, they had grown too big for the fund, which is mandated to own mid-sized companies, Evered explains. “They were all really good sales,” he adds.
In picking stocks, Evered trawls for companies with market caps of $1 billion to $8 billion that are increasing profits. His interest is piqued by sustainable annual earnings growth of more than 15%. Next, he wants to see strong balance sheets. Beyond that, he favors industry leaders with a competitive edge, like patents.