Large Cap Strategy

OVERVIEW

The decision-making process of the Baird Large Cap portfolio (subadvised by L2 Asset Management LLC) is primarily quantitative and driven by proprietary models that rank securities based on fundamental measures of value, past performance and indicators of recent positive changes.

In addition to a quantitative assessment, the portfolio manager evaluates the outputs from the models based on regular fundamental analyses and uses such evaluation to identify process-oriented items to improve the model. More specifically, characteristics or items identified as potential risks or opportunities on a fundamental level are tested to see if they are actionable and can be part of a repeatable investment process.

In selecting investments, the process focuses on securities that are out of favor in the marketplace but have experienced favorable risk-adjusted returns. While the portfolio manager considers both growth and value factors in its investment processes, the selection process may have a tendency to be more value-oriented.

TEAM

For more information, contact Skip McGregor or the Intermediary Specialist in your region.

Matthew Malgari and Sanjeev Bhojraj co-manage the Baird Large Cap Strategy together. 

COMMENTARY

Q2 2017 Large Cap Equity Commentary

The second quarter of 2017 saw the S&P 500 rise 3.09%, extending the market's year-to-date gain 9.34%. By comparison, the Baird Large Cap Fund posted a return of 2.85% for the second quarter and 9.19% for the year-to-date. L2 continues to believe the market is excited over the electoral promises of more defense spending, deregulation, large outlays on infrastructure and a potential overhaul of the tax code. Considering the Fund's preference for profitable firms with solid businesses at reasonable prices we are comfortable with performance against a benchmark that was once again driven by the FANGs (i.e., Facebook, Amazon, Netflix and Google). In Q2 we saw growth continue to outperform value to such degree that by the end of the H1 2017, growth had trounced value by 8.48% creating a significant headwind for the Fund due to its significant value tilt.1 Health Care, Industrials and Financials led the index higher in the quarter, rising in excess of 7%, 4% and 4% respectively, while Telecoms, Energy and Consumer Staples were the market's worst performers falling 7% and 6% respectively, and Consumer Staples posted a positive return of 1.5%. In the market's three best performing sectors, the Fund's contribution to its total return summed to roughly 200bps while in the market's three weakest sectors the Fund's contribution to returns was negative 20bps.

Read Full Large Cap Equity Commentary