The TD US Blue Chip Equity Fund is managed by $1.4T U.S. based money manager T. Rowe Price. Larry Puglia has managed the five-star fund since inception in 1993, and has remarkably been able to outperform his peer groups by over 90% across all long term time horizons. The fund has approximately 120+ holdings, and is focused on companies that can generate durable earnings and free cash flow growth. That typically comes from:
1. A leading market position
2. Management that knows how to allocate capital
3. Strong financial fundamentals, principally a high return on invested capital.
While we certainly do not want to underestimate the near-term impact from the coronavirus outbreak, history shows that events like this tend to offer opportunities for investors that have a long-term orientation. We are likely to see more volatility in the coming weeks and months until we get more certainty around the outbreak's economic impact, but it should not alter the long-term fundamental thesis of many of the companies we own.
We believe that, in time, the crisis conditions will ease, and markets will recover. However, investors should think now about how economic and market behavior might be altered once we move beyond the worst of the crisis. While we believe economic conditions will improve as the health crisis recedes and a feeling of normalcy returns, we think some changes will prove permanent. The pandemic will almost certainly affect the calculus of the U.S. elections later this year, for example, and certain companies and industries will be fundamentally altered.
As always, we maintain a disciplined adherence to our rigorous process, which is rooted in bottom-up, fundamental research. In addition to uncovering underappreciated idiosyncratic stories, this approach also helps prepare us to take advantage of the market's tendency to overshoot on both the downside and the upside. Potential market overreactions often provide opportunities to trim positions into strength and add to our highest-conviction ideas on weakness.
