“The thing about active management, depending on one’s approach, obviously, is that inefficiencies in the market can be beneficial,” TrueMark Chief Investment Officer Mike Loukas told NYSE’s Judy Shaw at Exchange: An ETF Experience 2022 for ETF Leaders, powered by the New York Stock Exchange.
To navigate anticipated market volatility, Fed policies, inflation, and the war in Ukraine this year, Loukas advises TrueMark’s clients to stick with its active investment strategies, “stay the course,” and “block out the noise.”
TrueMark is more traditional in its fundamental approach to buying companies. While the portfolio management team will check in and make sure that the macro factors creating uncertainty in the markets aren’t damaging its investment thesis, by and large, they want to hold onto the stocks it’s selected “through this type of noise.”
“We buy companies, not buzzwords and trends,” Loukas said.
Opportunities in Secular Growth
When the interview was conducted in April, the TrueMark CIO offered “a bit of a contrarian approach” by saying that he thought there were some good opportunities within secular growth, particularly within technology stocks.
“When there is this much noise, and you see growth get beaten up like it has, there are massive opportunities in the secular growth side,” Loukas said.
Loukas added that tech companies, particularly software-as-a-service companies “have been unfairly beaten up” because of macro events, noting that the budgets of most companies he’s studied “have increased their tech spending.”
Buzzwords vs. Business Models
For TrueMark, it’s important to acknowledge the difference between the buzzwords and the business models.
“There are great buzzwords out there,” Loukas said, citing ‘disruption’ as an example. But while he could “stand out in the street and disrupt traffic,” that “doesn’t mean [he’s] going to make money doing it.”
“So, you have to look for companies that not only are in areas that can harness disruptive tech or harness changes in the economy as we move into what we consider a new economic paradigm. But they have to have solid business models,” Loukas said. “You have to see accelerating fundamentals, you have to see the ability to run a business, to capitalize an opportunity, and to utilize their intrinsic IP or competitive advantage and monetize that.”
For more news, information, and strategy, visit VettaFi.
