Need to Know Archives | Email alerts

Jan. 29, 2020, 9:56 a.m. EST

How Microsoft, PepsiCo and other solid plays helped this fund manager ride out a bumpy decade

Critical information for the U.S. trading day

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Jensen Quality Growth Fund;J (JENSX)
  • X
    Microsoft Corp. (MSFT)

or Cancel Already have a watchlist? Log In

By Barbara Kollmeyer, MarketWatch


Getty Images
In 2000, when times were tougher for Microsoft.

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 +1.56%  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 , Microsoft /zigman2/quotes/207732364/composite MSFT +2.28% , PepsiCo /zigman2/quotes/208744353/composite PEP +1.50% , medical technology group Beckton Dickinson /zigman2/quotes/202288971/delayed SG:BTX +4.55% and Johnson & Johnson /zigman2/quotes/201724570/composite JNJ +0.68% .

“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/composite GOOGL +1.14%  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 market

The Dow /zigman2/quotes/210407078/delayed YM00 -0.04% , S&P /zigman2/quotes/210599714/realtime SPX +1.60%   and Nasdaq /zigman2/quotes/210598365/realtime COMP +2.26%  are higher as trading gets underway, while European stocks /zigman2/quotes/210599654/delayed XX:SXXP -0.10% also rose. In Asia, Hong Kong’s Hang Seng /zigman2/quotes/210598030/delayed HK:HSI -0.32%  reopened with losses, while South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.27%    posted gains.

The chart

Our chart from Goldman Sachs shows which assets have been hardest hit by coronavirus concerns in recent days:


Bloomberg, Goldman Sachs
Performance between Jan. 17 and Jan. 27, 2020

They also note that investors may want to brace for four weeks of rough trade, based on prior epidemics:

/zigman2/quotes/200918620/realtime
US : U.S.: Nasdaq
$ 53.39
+0.82 +1.56%
Volume: 0.00
Sept. 25, 2020
loading...
/zigman2/quotes/207732364/composite
US : U.S.: Nasdaq
$ 207.82
+4.63 +2.28%
Volume: 29.44M
Sept. 25, 2020 4:00p
P/E Ratio
36.08
Dividend Yield
1.08%
Market Cap
$1572.71 billion
Rev. per Employee
$902,473
loading...
/zigman2/quotes/208744353/composite
US : U.S.: Nasdaq
$ 133.55
+1.97 +1.50%
Volume: 4.58M
Sept. 25, 2020 4:00p
P/E Ratio
27.28
Dividend Yield
3.06%
Market Cap
$184.92 billion
Rev. per Employee
$242,172
loading...
/zigman2/quotes/202288971/delayed
SG : Singapore: SGX
$ 0.23
+0.01 +4.55%
Volume: 0.00
Sept. 16, 2020 10:57a
P/E Ratio
4.85
Dividend Yield
10.25%
Market Cap
$11.19 million
Rev. per Employee
N/A
loading...
/zigman2/quotes/201724570/composite
US : U.S.: NYSE
$ 145.66
+0.99 +0.68%
Volume: 5.53M
Sept. 25, 2020 4:00p
P/E Ratio
25.60
Dividend Yield
2.77%
Market Cap
$383.50 billion
Rev. per Employee
$603,509
loading...
/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 1,439.06
+16.20 +1.14%
Volume: 1.52M
Sept. 25, 2020 4:00p
P/E Ratio
32.10
Dividend Yield
N/A
Market Cap
$980.76 billion
Rev. per Employee
$1.39M
loading...
/zigman2/quotes/210407078/delayed
US : U.S.: CBOT
$ 27,032.00
-11.00 -0.04%
Volume: 212,444
Sept. 25, 2020 3:59p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,298.46
+51.87 +1.60%
Volume: 2.18B
Sept. 25, 2020 5:06p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
10,913.56
+241.30 +2.26%
Volume: 3.38M
Sept. 25, 2020 5:16p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
355.51
-0.34 -0.10%
Volume: 0.00
Sept. 25, 2020 11:03p
loading...
/zigman2/quotes/210598030/delayed
HK : Hong Kong Exchange
23,235.42
-75.65 -0.32%
Volume: 1.79M
Sept. 25, 2020 4:08p
loading...
/zigman2/quotes/210598069/delayed
KR : Korea Exchange
2,278.79
+6.09 +0.27%
Volume: 697,961
Sept. 25, 2020 3:32p
loading...
1 2
This Story has 0 Comments
Be the first to comment
More News In
Markets

Story Conversation

Commenting FAQs »

Partner Center

World News from MarketWatch

Link to MarketWatch's Slice.