Coho ESG US Large Cap Equities
Why Coho for US Equities?
As per Q4, 2019 the Coho Relative Value Equity (CRVE) strategy has an annualized outperformance of over 3% the S&P 500 Total Return index since inception in 2000. Coho outperforms >90% of peers in the eVestment database since inception. This strategy of quality companies with predictable streams of earnings offered protection during the IT crash in 2001, the financial crisis in 2008, the Euro crisis in 2011 and during Q4 of 2018. The strategy is fully invested without the use of derivatives. Over the last 2 decades, the down-market capture has been 65%-75 %. This resulted in superior performance with lower risk versus the benchmark and most peers. While keeping the characteristics of the CRVE strategy in place, the ESG portfolio was established in 2011. Coho Partners manages USD 8 billion in US Large Cap Equities. Coho is an independent firm, employee-owned and many employees are invested alongside investors. The valuation of the Coho strategy versus the S&P 500 has become very attractive after multiple years of outperformance of economic sensitive stocks. This defensive strategy is a strong candidate in an environment of gradual rising, steady or declining markets.
Coho Partners, the firm:
- Founded in 1999, employee owned, focused on 1 investment approach only US Large Cap Equity
- ESG track record as of 2011, ESG is fully integrated and SDG impact report available
The Investment Philosophy is as follows:
Coho firmly believes that the best way to create and sustain long-term wealth is to
- Protect principal in down markets
- Generate competitive returns in all but the most cyclical or speculative up markets
Where protection and participation meet
Coho strives to generate a specific, asymmetric pattern of returns over time with a portfolio that demonstrates a down-market capture considerably less than its up-market capture.
By creating an intersection of protection with participation, we provide an opportunity for better-than-market performance over an economic cycle with less-than-market risk.
Coho’s goal is to create significant alpha over time versus benchmarks and peers through the combination of losing less than the benchmark during bear markets and performing near the benchmark in bull markets.
Investment process, an overview
- The stocks within our custom advantaged universe (Coho ESG 200) are explicitly chosen for their defensive characteristics of stability and consistent growth whilst exclusionary and integrated ESG assessments apply.
- Our proprietary valuation discipline (Coho Dividend Discount Model) ensures that within this investable universe, the portfolio is focused only on those stocks with reasonable valuations and compelling expectations.
- Portfolio construction is always focused on the least economically sensitive and most risk adverse sectors and business models. Our portfolio is uniquely comprised of two types of companies:
1)Demand Defensive and
2)Economically Sensitive companies. - Our non-systematic risk is diversified over 25-30 holdings, where factor and business model correlations are carefully monitored.
- The resulting portfolio characteristics confirm the "shock absorbers" that are in place to instill downside protection relative to the overall equity market.
Why Coho
- We believe that our biggest competitive advantage stems from the process of constructing the Coho ESG 200. Much work is done to identify the 200 companies that have the asymmetric performance characteristics desired. Our fundamental research effort only focuses on those 200 companies to build the portfolio.
- With a long-term focus and low turnover, we populate the portfolio with stocks of high quality companies that have demonstrated long-term predictable growth in revenues, earnings and dividends at reasonable valuations.
- Our strategic allocation to what we call the "demand defensive" sectors has been beneficial to performance over the long term.