By Barbara Kollmeyer, MarketWatch
Secure those eyes on the back of your head for Wednesday.
After record-breaking Apple results, investors will look to Facebook, Tesla and a trove of other companies to bring in some upbeat earnings. We’ll also get the outcome of the Federal Reserve meeting, where markets are looking for steady policy and could use some calm demeanor from Chairman Jerome Powell.
That is as the coronavirus death toll tops 130 and confirmed China cases near 6,000, notably overtaking the SARS outbreak of 2003. It may prove a big test for the old and new investor.
Our call of the day comes from Eric Schoenstein, portfolio manager for the Jensen Quality Growth Fund /zigman2/quotes/200918620/realtime JENSX -3.37% at Jensen Investment Management, who joined the firm in 2002 and started managing the fund in 2004, has clearly seen the fund through a number of market crises over the years.
Average annual total returns for the fund over 10 years are just over 13%, keeping pace with the S&P 500. He said the buy-and-hold fund has consistently sought companies with strong business models and a competitive advantage to keep free cash flow coming and ride out market-moving events. Think consumer staples, IT and health care, Schoenstein tells MarketWatch.
Some of the top five companies in that fund have been in it more than a decade—conglomerate United Technologies /zigman2/quotes/203237915/lastsale UTX -7.16% , Microsoft /zigman2/quotes/207732364/lastsale MSFT -4.11% , PepsiCo /zigman2/quotes/208744353/lastsale PEP +0.17% , medical technology group Beckton Dickinson /zigman2/quotes/202288971/delayed SG:BTX 0.00% and Johnson & Johnson /zigman2/quotes/201724570/lastsale JNJ -2.69% .
“When we first owned Microsoft it was dead money,” the manager said, noting that regulatory concerns were hanging over the software maker, but that it went on to become a jewel in the portfolio.
Schoenstein is braced for a tougher 2020, though. “We remain somewhat concerned about what’s happening in 2020,” he said, adding that for gains to continue, markets will need to see more support coming from “actual earnings and business performance.”
The fund also holds Google parent Alphabet /zigman2/quotes/202490156/lastsale GOOGL -4.53% and Apple. Fellow fund manager Kevin Walkush said they started investing in 2016 in Apple, and while they remain happy on the iPhone maker’s prospects and fundamentals, valuation gives them pause so they’d be “cautious about initiating a position at this time.”
The Dow /zigman2/quotes/210407078/delayed YM00 -0.13% , S&P /zigman2/quotes/210599714/realtime SPX -3.37% and Nasdaq /zigman2/quotes/210598365/realtime COMP -3.79% are higher as trading gets underway, while European stocks /zigman2/quotes/210599654/delayed XX:SXXP -3.26% also rose. In Asia, Hong Kong’s Hang Seng /zigman2/quotes/210598030/delayed HK:HSI +0.56% reopened with losses, while South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.87% posted gains.
Our chart from Goldman Sachs shows which assets have been hardest hit by coronavirus concerns in recent days:
Bloomberg, Goldman Sachs
They also note that investors may want to brace for four weeks of rough trade, based on prior epidemics: