James Abate expects his fund to differentiate itself this year by maintaining a traditional perspective on stocks. The fund manager has maintained an excellent track record with its US Defined Equity Fund (DHAMX), which it launched in 2011, which ranks among the top 1% of funds in the large-cap mixed group of companies over 1 year, 3-year and period 5 years. This performance earned DHAMX five stars from the Morningstar. Moreover, the U.S. Big Capital Growth Fund is down about 3% this year, compared to an 18% loss in the category average, outpacing 99% of its peers in 2022, according to Morningstar. “The real distinguishing features of what we do, particularly with the US Specific Equity Fund, is that it is rooted in a very sound financial foundation, looking at all aspects of the company in terms of the capital investment they make,” Abate said. “We are essentially the opposite of ARK and momentum investing,” he added. “We are the opposite.” ARK Invest’s flagship fund, the ARK Innovation ETF, of Cathie Wood, is down 28% this year. Strong earnings momentum Abate’s focus on fundamentals, in contrast to the approach linked to price momentum, has him focusing on companies with strong earnings momentum and pricing power in what he expected to be a risk-free, high interest rate environment. The fund manager keeps a concentrated portfolio of 35 to 50 of his best ideas. Over the past 18 months, this research has led him to increase allocations in two sectors: energy and materials. Allocating 24% to energy, much larger than the category weight of just 4% in the sector, has helped ride the bottom in the rise in oil and gas prices this year. Among the major oil and gas companies in his fund are Exxon and Chevron, as well as other companies such as hydrocarbons company EQT and natural gas company Range Resources. Assigning 23% to core materials, compared to an average weight of 2.7% in its class, boosted the portfolio. The investor highlighted chemical company Corteva, as well as fertilizer stocks such as CF Industries and Mosaic, as some of the notable performers. The fund manager said he expected a lot of easy money now to be made in the two sectors, as investors may have mostly taken advantage of the opportunity when it presented itself again in October 2020. However, he believes there are still some positive aspects to be achieved, he said. “The market may be more balanced.” “But it is very difficult to see how, with many people expecting things to go back to the way they were, a technology-driven world, the structural issues that are still embedded in most of the analysis that we see is that this bear market — which is a bear market — is not He still needs to get through more.” The fund manager also incorporates hedging techniques, specifically put options, from time to time to strengthen the portfolio during periods of volatility, such as during a pandemic. This year, the fund rolled out options on the Nasdaq 100 at the start of the year, sensing a correction in tech stocks. Taking healthcare regardless, the investor is shifting the screws somewhat to prepare for higher inflation for a longer period. “Our expectation, regardless of economic downturn or stagnation, is that inflation will remain more steady than people expect, mainly because of the supply side, and that the capital discipline that we talked about in most companies and commodity-producing regions, is something Abate said: “And because the Fed can only destroy demand, not create new supply, it is very likely that we are in a more stagflationary environment than people have experienced over the past 20 or 25 years.” Somewhat profitable in the energy sector, although it continued to favor natural gas over liquids.Abate also significantly increased the fund’s exposure to the healthcare sector, where the fund had previously underperformed, particularly in well-established biotech names.Include Major stock picks Biogen, Gilead Sciences and Amgen The fund certainly has one flaw highlighted by Morningstar, a massive 1.46% expense ratio. It’s “swimtime for adults” Abate predicts success in his fund, which he started in 2006 , mainly related to the basic fact that it managed money through multiple business cycles, whether it was through the current Covid-19 pandemic, the 2008-2009 mortgage crisis, the 9/11 attacks, and the dotcom bubble. Before founding Center Asset Management in 2006, Abate began his career as director of appraisal services at PriceWaterhouseCoopers in 1987, according to LinkedIn. He was head of active US equities at Swiss investment bank Credit Suisse from 1995 to 2000, then director of investment at the Greater Amman Municipality until 2006. Abate expects markets to remain challenging for some time, and has urged investors to maintain a fundamental approach to markets, and is not opposed to accepting What he calls “scandalous investments”. “This is adult swimming time,” he said.