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SMA Manager of the Year Andy Bischel on Market Dysfunction and Fundamentals

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(Video: Mimi Productions)

SKBA Capital’s ValuePlus strategy, one of two winners in the 2017 SMA Managers of the Year in the U.S. equity large-cap category, uses relative dividend yield to build a portfolio of high-quality stocks that have the potential to outperform the Russell 1000 Value Index over time.

“Markets routinely overshoot the true change in the underlying fundamentals, whether it’s earnings deterioration or a valuation issue,” according to Andy Bischel, CEO and chief investment officer of SKBA Capital Management. As a result, dividend yield — the ratio of dividend to stock price — rises because the stock price is falling.

Some portfolio managers will avoid those stocks but SKBA doesn’t, especially if the stock’s dividend yield is also high relative to its own history and there are no signs that the company is in such dire straits that it might cut its dividend.

— Read The Long Game: 2017 SMA Managers of the Year for more from this year’s winners.