Active management provides the opportunity to curate a portfolio of quality companies that extends beyond the constraints of indexes. Such is the case for the Natixis Loomis Sayles Focused Growth ETF (LSGR ), which combines quality with long-term growth investing.
LSGR uses active management to seek out large-cap quality companies. Not only do investors benefit from the fund’s active management, they also benefit from the strategy’s fundamental and thorough stock analysis and research.
The strategy uses a seven-step security selection process to select quality companies currently trading at a discount to their intrinsic value. The fund also seeks those companies with sustainable growth trajectories and competitive advantages within their industries.
“Only within the context of quality and attractive valuation do we focus on sustainable growth businesses,” explained Aziz Hamzaogullari, CFA, founder, CIO, and PM, Loomis Sayles Growth Equity Strategies, in a video. “For us, growth needs to be both profitable and secular.”
The Importance of a Long-Term Focus When Growth Investing
While LSGR relies on active management in its stock selection, it maintains a long-term time horizon when including growth trends. Current growth trends captured within the fund range from AI, the transition to cloud computing, the growth of e-commerce and electronic payments, to cystic fibrosis and healthcare, and energy drinks.
“The key for us is that all these businesses also need diverse cash-flow growth drivers,” Hamzaogullari noted.
This approach means that when looking short-term (12 months or less), some constituents within the portfolio may underperform while others outperform. This is all part of the strategy’s design in its longer-term scope as it seeks to find quality performers for the next decade and longer.
Investors would do well to “remember that when you look at the last 100 years of history [and] of the markets, you will find that there have been many different regimes for discount rates or interest rates,” said Hamzaogullari.
These happened alongside periods of sudden, significant geopolitical risks and changes. Despite the changing regimes, many companies demonstrated long-term, positive performance. “This is a great example of understanding and having a structural and permanent view about risk,” Hamzaogullari said. It’s also about “understanding that great businesses can flourish through very significant disruptions.”
LSGR uses a disciplined approach to buying and selling securities and carries a net expense ratio of 0.59%.
For more news, information, and analysis, visit the Portfolio Construction Channel.
