Stephen Duench, CFA, is Vice President and Portfolio Manager of AGF Investments Inc. As Vice President and Portfolio Manager, Stephen Duench is a key contributor to AGF’s quantitative investment platform, AGFiQ.
AGFiQ’s team approach is grounded in the belief that investment outcomes can be improved by assessing and targeting the factors that drive market returns. Mr. Duench is the lead Portfolio Manager of the AGFiQ Dividend Income Fund and AGF Canadian Large Cap Dividend Fund and is central to the creation and support of AGFiQ’s portfolio management tools, analysis and applications across both Canadian and global mandates.
He began his career with AGF as part of the Highstreet Investment Management team. Highstreet Asset Management Inc. is a wholly owned subsidiary of AGF Investments Inc. Mr. Duench earned an honors degree in financial mathematics from Wilfred Laurier University and is a CFA charterholder.
In this 2,563 word interview, exclusively with the Wall Street Transcript, Mr. Duench reveals the key operating principles for his portfolio management platform and details its market beating output.
“My entire career has been spent on the quantitative side of the business, so it’s very much my first language within investing. We have a very deep research team with more Ph.D.s than any other investment team in Canada.
We’re constantly looking to test the newest concepts with academic rigor and apply them into our investment processes.”
This lead to a real insight in December of 2019:
“So with respect to that, they are outperforming many of our Canadian counterparts quite handily this year.
The reason for that is largely what was at the time a very out-of-consensus call I made in December, and that was to sell out of all my energy E&P and energy integrated stocks.
While Bay Street and Wall Street sellside strategists seemed to be getting very bold on the energy sector in December, I was taking the exact opposite view.
The premise of that was that the relative return of energy into December was historically strong, driven near the end of the year by higher-risk stocks.
Historically, when you see significant strength, it’s usually a time to trim some profits. But also, at the time, there was an abundance of other opportunities forming in the market, specifically lower-volatility-type stocks…”
This has created the opportunity for the portfolio to re-center around high value, low cost stocks:
“In IT, I’ve been very busy the last few weeks and doing a lot of work on structurally sound, long-term IT names such as Microsoft (NASDAQ:MSFT) or Visa (NYSE:V) or Apple (NASDAQ:AAPL), for instance. These are all household names, but these are the types of names that have been producing and operating at a very high clip.
Much better than some others within the sector. Their earnings will likely be revised but so will the entire space, and I believe these sorts of stocks are on better footing for multiple years.
When their valuation profile comes back to certain levels, I have to make sure that I’m positioned correctly to take advantage of them.”
Get the complete picture from Mr. Duench by reading the 2,563 word interview, exclusively with the Wall Street Transcript.
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