Stephen Otto Title: Senior Vice President/National Sales Manager, Managed Accounts Years with present firm: 20 Years in financial services: 28 Investment/asset class focus: Large Cap Value
Asset Management Firm: Federated Investors Firm's headquarters: Pittsburgh Year firm was founded: 1955 Number of employees and/or partners: nearly 1,900 employees Assets under management/advisement as of Dec. 31, 2018: $460 Billion
There's no doubt that 2018 was an interesting year, says Steve Otto, senior vice president of Federated Investors, especially as interest rates spiked in the first quarter and the market swooned in the fourth.
Federated's Strategic Value Fund, which won the Asset Manager Award in the Large Cap Value asset class in 2019, typically enjoys 70–80% of market upside but 60–70% of the downside. In the fourth quarter, when the market was down 13%, the Strategic Value strategy was down "just a little over 6%," according to Otto.
"When I look at 2018 as a whole, our goals … were simply to get that 4-5% dividend yield and 4-5% growth. We delivered on those objectives for 2018. From that perspective, we feel very good about what we accomplished in 2018," he says.
"The bull market has been ongoing for some time. If mean reversion is due to occur at some point, then this strategy is a good choice," Envestment analysts explain. "It's highly defensive nature, i.e., a downside capture ratio of 57.77%, would make it likely to outperform during a correction."
Federated's "goals-based portfolio" isn't focused on the short-term, Otto says, nor does the firm have a "concern in regards to what the macro environment might be. Our goal again is focused on the businesses."
