US Blue Chip Equity Fund

Investment involves risk. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Overview

Strategy

Fund Summary

Actively managed and invests mainly in a diversified portfolio of shares of large and medium sized “blue chip” companies in the United States.

Performance - Net of Fees

30-Nov-2023 - Paul Greene, Portfolio Manager,

We remain satisfied with how the portfolio is structured; there were no material changes to positioning during the month. While many investors are speculating that continued disinflation trends and resilient economic growth could result in a soft landing, with rate cuts to follow in 2024, we continue to exercise caution and maintain some defensive posturing. In addition to traditional defensive exposure, we would note that given the relative strength in fundamentals for many of our mega-cap technology holdings, this sleeve of the portfolio could provide some underappreciated downside support if that market begins to fall again.

30-Sep-2022 - Paul Greene, Portfolio Manager,

We eliminated our stake in Snap Inc. on an impaired investment thesis amid worsening near-term risk/reward. The company is weathering several headwinds, including a challenging economy, slowing demand for the company's online ad platform, the lingering impact of Apple's 2021 iOS privacy changes update, and rising competition. In response to these challenges, the company announced plans to slow its pace of hiring, invest in its advertising business, and find new sources of income. However, we are concerned that these moves will not adequately address the numerous challenges that the company faces.
We bought shares of Netflix on weakness as the stock continued to trade lower due to lingering concerns related to the company's decline in global subscribership during the first quarter. We are optimistic that the addition of an ad-supported subscription tier can help to extend the platform's growth runway and provide margin support. Going forward, we will be closely monitoring the company's trajectory of growth. We are mindful that the company faces high execution risk ahead of its advertising launch and password-sharing crackdown. While Netflix has produced an attractive content slate featuring both returning and new programs, the company will need to examine the historical correlation between content slate strength and gross subscriber adds.
Fortinet is the second-largest global network security provider to enterprise and telecom service providers. We sold shares on reduced near-term risk/reward due to a deteriorating macro environment and information technology spending outlook. Over the long term, we still view Fortinet as a share gainer in a high-growth industry with a technological advantage that should enable higher sustainable free cash flow and operating margins than peers.
We pared back our stake in Microsoft to manage our position size amid worsening macroeconomic conditions. An extended production shutdown in China, reduced operations in Russia, lower personal computer shipments, and foreign exchange headwinds had a negative impact on performance. We remain impressed by the outstanding performance of Microsoft's Azure cloud computing segment, which has become hugely additive to the company's overall business. Azure's strong performance has been complemented by an expansion in on-premises data center software. We continue to appreciate Microsoft's smart capital allocation and the potential of its push into analytics and artificial intelligence.

30-Sep-2022 - Paul Greene, Portfolio Manager,

Shares of electric carmaker Tesla rallied, drawing support from upbeat second-quarter earnings and higher net sales driven by the company's production ramp-up. Steady demand for electric vehicles, coupled with higher pricing and strong operational execution, also buoyed shares. We believe that Tesla stands to benefit from a faster ramp-up in production capabilities across its new factories in Austin and Berlin, along with a recovery in the electric vehicle (EV) market in China. We appreciate Tesla's leadership in the EV space and the company's high level of differentiated innovation.
Shares of Amazon outperformed as the troubled e-commerce segment demonstrated material reacceleration and margin improvement that complemented continued strength from Amazon Web Services and advertising. In our view, Amazon.com has three businesses (e-commerce, Amazon Web Services, advertising) that each are levered to durable secular growth themes, are attacking huge addressable markets, and have plenty of runway left for growth. The company also continues to reinvest profits into other segments like devices and video, which we think should bode well for future growth and enhance the overall value proposition of its expanding ecosystem.
Shares of UnitedHealth Group outperformed in relative terms. The stock was supported by a strong second-quarter earnings release, which was underscored by significant�upside from the insurance business and�continued revenue growth in its Optum business. We are encouraged by the managed care giant's strong execution and its much-improved medical loss ratio. We believe that UnitedHealth Group's ability to provide steady growth is underappreciated by the market. We view the company as well positioned, thanks to its leadership in the fast-growing Medicare Advantage market, as well as the Optum business, which captures a larger share of health care spending by providing services like care delivery, analytics, and prescriptions in a cost-effective manner that results in better outcomes for patients.
Shares of ServiceNow traded lower as macro uncertainty is forcing enterprises to apply additional scrutiny when it comes to information technology (IT) spend, which in turn is elongating the company's sales cycle and pushing deals out into future quarters. We believe that ServiceNow's high quality software-as-a-service offerings and strong platform should enable the company to continue to take share in its core IT service management market while also expanding to adjacent markets

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Risks

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