At Sentry, we don’t use labels like “value” or “growth” to describe how our portfolio managers manage money. We simply call it our house style, and it works.
Our disciplined house style is focused on delivering superior risk-adjusted returns.
The results of our house style are not only reflected in our performance. Our funds typically don’t look like other funds. We tend to have fewer holdings in each fund, and we don’t pay attention to indices when it comes to the securities or sector weightings in our funds. Instead, we focus on finding high-quality, healthy companies that share specific attributes that help them weather market volatility and provide the greatest growth potential.
What do the attributes of a healthy company look like? They include leadership from a solid management team, a strong balance sheet, strong free cash flow and low debt, and wise capital allocation – either reinvesting in the business or paying dividends to shareholders.
The commitment to our house style is deeply rooted in the organization. Many of our senior investment managers are long-time members of the organization and have honed their skills with the house style as their foundation. They are now mentoring the next generation of Sentry managers. We also continue to add talent to expand the capabilities of our investment team, but with a bias toward experienced managers who have a proven track record demonstrating key elements of our house style.
Although our portfolio managers share a common investment philosophy and process, they are encouraged – in fact, expected – to be independent thinkers. This is again made possible thanks to our independence as a company. There is no room for herd mentality here.
We value the difference of opinion that each portfolio manager brings and the opportunity to share ideas with each other. A culture of independent thinking coupled with collaboration creates a healthy platform from which to make the best possible investment decisions.
Chief Investment Strategist James Dutkiewicz: How investors benefit from collaboration at Sentry
Our managers are not compensated on their ability to match or slightly outpace an index. Instead, the majority of their compensation is directly tied to delivering superior risk-adjusted returns. This means that their interests are aligned with the interests of our investors.
So how do our managers deliver the highest possible risk-adjusted returns for investors?
By having the freedom to do what other money managers may not. For instance, we’ll invest in companies out of the mainstream because of our unique approach to assessing risk and growth potential. Or we’ll likely have a portfolio with fewer stocks if the manager can’t find quality companies that meet our strict criteria.
Very simply, we can’t deliver superior risk-adjusted returns by building a portfolio relative to an index. We do it by trusting and empowering our managers to invest with confidence and conviction in their best ideas.
This is true active management.