Key Morningstar Metrics for Maj Invest Value Aktier
- : NeutralMorningstar Medalist Rating
- : ★★★Morningstar Rating
- : Above AverageProcess Pillar
- : Above AveragePeople Pillar
- : AverageParent Pillar
Danish-domiciled Maj Invest Value Aktier MAJVAL and its Luxembourg-domiciled cousin Maj Invest Global Value Equities are run by a talented but compact team of portfolio managers, who follow a well-structured and consistently applied process. Their high-conviction approach is commendable but not without risk. The strategy retains Above Average Pillar ratings for both People and Process.
Seasoned portfolio managers Kurt Kara and Ulrik Jensen have co-managed this strategy since its inception in 2005. The team was reinforced in 2015 when Rasmus Quist Pedersen joined as an analyst and became a portfolio manager in 2019. Pedersen left the firm in September 2024 for personal reasons and was replaced by Andreas Johan Lindtner, who joined as an analyst after spending four years in a similar role at the firm’s global large-cap growth equity strategy.
The trio operates cohesively but also relatively autonomously, as there is only marginal overlap with other equity strategies at the firm. Although resources are limited, a comprehensive quantitative screening helps managers focus their research efforts, while the turnover of names in the portfolio is modest. They co-invest in the strategy, thereby aligning their interests with investors’. While the small team size improves accountability, the fund cannot draw on the same level of support that peers have, and key-person risk is significant.
The managers favor quality stocks but require a margin of safety in their valuation before considering them. They rely heavily on the ideas that are generated by their quant screening model, which directs their fundamental research efforts. The model has been built in-house and scours the investable universe on a comprehensive set of metrics focusing on a company’s stability, profitability, return potential, balance-sheet quality, and valuation. It leaves them with roughly 100 names to consider for further research. The level and consistency of a company’s return on invested capital is a key metric by which the trio measures its quality, but they also assess its business fundamentals, market position, balance-sheet strength, and quality of management. While the managers strive for quality, they remain highly disciplined regarding the price they are willing to pay when selecting the 25 to 35 stocks for their portfolio.
They can adopt contrarian positions when market behavior appears irrational, filtering out short-term noise and maintaining a focus on long-term fundamentals. Consequently, large deviations from the market benchmark are typical. As high-quality stocks became overvalued in the managers’ view, the portfolio drifted more into value territory since 2017. Turnover in the portfolio is modest at around 50% a year and is often driven by position sizing rather than new ideas entering the portfolio.
The managers’ stock-picking talent has been a key driver of the strategy’s long-term track record. While they have added value in most of the calendar years throughout their tenure, 2022 was a brutal exception. The strategy missed the value comeback in 2022 because of the absence of outperforming energy and tobacco stocks, and limited exposure to the defense industry didn’t help. Furthermore, the strategy suffered from its exposure to the semiconductor industry, a sharp correction in the stock price of top five holding Meta Platforms, and underwhelming performance from its China-exposed companies. Additionally, several consumer discretionary picks were hit by recession fears. While this cocktail of headwinds left a deep scratch on the strategy’s track record, the managers held conviction in their approach, which paid off in the years after.
Maj Invest Value Aktier: Performance Highlights
As the strategy changed categories on Dec. 1, 2024, the relevant peer group and category index have changed to, respectively, the global large-cap value equity category peer group and the Morningstar Global Value Target Market Exposure Index benchmark. The managers’ stock-picking talent has been a key driver of the strategy’s long-term track record. Throughout history, stock selection within consumer cyclical, financial services, and healthcare has contributed most positively to performance, while from a regional perspective, the managers have demonstrated good selection capabilities in the US.
The strategy has typically outperformed when quality-value stocks did well. While the managers have added value in most of the calendar years throughout their tenure, 2022 was a brutal exception. In that year, the strategy underperformed the category average and index by 16 percentage points and almost 19 percentage points, respectively. The strategy missed the value comeback in 2022 because of the absence of outperforming energy and tobacco stocks, and the limited exposure to the defense industry didn’t help. Furthermore, the strategy suffered from its exposure to the semiconductor industry, a sharp correction in the stock price of the top five holdings, Meta Platforms, and underwhelming performance from its China-exposed companies. Additionally, several consumer discretionary picks were hit by recession fears. While this cocktail of headwinds left a deep scratch on the strategy’s track record, the managers held conviction in their approach, which paid off in the years after. A significant rebound of Meta Platforms, a share price recovery of Softbank, and a semiconductor rally helped the strategy to recoup lost ground. The erratic performance translates into elevated volatility statistics and poor downside capture ratios over shorter periods. However, long-term risk-adjusted returns remain solid.
