Blue Chip Partners: Quarterly Edge Q3 2024
07/15/24
Finance and Estate Planning In-Office Seminar Oct 23rd 4:00 pm
10/04/24
At the beginning of 2024, our very own Daniel Dusina took on the mantle of Chief Investment Officer. He was also a featured guest on the Markets Group podcast, where he talked to host Muskan Arora about how to craft an effective investment strategy, his market outlook, and plans for continuing to evolve the investment business within Blue Chip Partners (BCP).
The interview covered Daniel’s equity allocations, manager selection process, and strategic initiatives since becoming CIO.
What are a few things you intend to change, and what will you keep the same?
Since joining BCP as Director of Investments, Daniel’s role has been to centralize the investment process and the overall investment side of the business. While the recent change in role has not entailed any variation in responsibilities, it has allowed him to further focus on the matters that are most important to the business. BCP has many plans to grow, and Daniel’s role, as well as that of everyone else on the team, is to generate scale. From his seat, Daniel plans to continue to work on improving underlying processes. This includes further supplementing the firm’s existing security selection process, as well as implementing a more centralized approach to trading client portfolios.
Daniel: “What’s absolutely not changing is our inherent investment philosophy. We’re still going to be focused on high-quality businesses with … focus on companies that can pay and grow dividends. We’re not changing who we are at our core, but rather—the way I always explain what we’re doing on the investment side—to continue to enhance our process without altering our investment philosophy.”
Allocations Abroad
Daniel explained that on the domestic side of client portfolios, we build equity models internally to identify each company. Internationally, we outsource to partners and managers who align with our domestic philosophy.
Daniel: “The reason that we outsource on the international side is just that there are different factors at play than there are domestically, and we just don’t feel that we have the level of expertise to build the portfolio. Instead, we focus on the due diligence process.”
He also discussed how, when allocating internationally, we try to split the ticket to stay diversified and to encourage the managers to behave in their own way within our philosophy. We prefer active management internationally because it has historically shown excellent returns from managers who consistently demonstrate exemplary performance.
The interview then covered how important performance is in allocation selection. Rather than looking for a specific metric, he cares about consistency. Then, as part of due diligence, Daniel said that he likes to sit with the team to understand the processes involved in the manager’s trailing results because it can shed light on what has worked previously.
Part of the due diligence behind his selection process is reviewing each candidate’s trailing attribution for the past ten years, such as funds that look good on paper but have exhibited a high concentration when viewing the sources of returns. When working with bigger teams, he cross-references their processes to understand whether everyone is on the same page or if it is all just marketing.
Daniel: “Consistency of results is only possible if you have consistency of team.”
Regarding the US Presidential Election
In contrast to expectations, Daniel does not think this election cycle will make markets all that different from any other cycle, including the general return experience. There may be some volatility, but he does not expect a huge change in the game. This topic was covered in the podcast.
Then, they discussed how the changes in Fed rates have impacted his plans. He talked about how lower inflation changed investor expectations. “One definition of quality is companies that are a bit immune to pricing fluctuations,” he said. He also explored how pricing power has become more important in the current circumstances. Thus, it hasn’t changed how we operate but has informed a new path for analysis.
This episode was an excellent opportunity for Daniel to discuss how our models work and how they shape his own leadership style in terms of running an investment operation. He also shared strategies for seeking resilience without sacrificing long-term gains. Watch the full episode of the Markets Group podcast below and learn a bit more about the vision and experience of our CIO and how he is adapting our processes as underlying circumstances change.
*Pictures in this blog belong to a different forum hosted by Markets Group.
