Fisher investments is a well-known investment management firm founded by Ken Fisher. In 2020, its investment returns came under scrutiny as it underperformed the S&P 500 index significantly. This article will analyze Fisher investments’ stock price performance in 2020 compared to the S&P 500 benchmark, examine the potential reasons behind its underperformance, and provide an outlook on its future investment prospects.
Fisher investments’ 2020 returns lagged behind S&P 500 by a wide margin
Based on its company reports, Fisher investments’ Private Client Group composite returned 7.5% net of fees in 2020, which trailed the S&P 500’s total return of 18.4% by a significant margin of 10.9%. This level of underperformance versus the market benchmark raised eyebrows among clients and industry observers. The underperformance occurred as many active investment managers struggled in the pandemic environment of 2020, with shifting consumer patterns and market volatility testing traditional stock-picking strategies.
Multiple factors contributed to Fisher investments’ underperformance in 2020
Several key factors led to Fisher investments’ lackluster returns in 2020 compared to the S&P 500:
– Overweighting in value stocks: Fisher investments’ value-focused strategy led it to underweight high-flying technology stocks in 2020. This proved detrimental as tech stocks soared while value stocks lagged.
– Failure to adapt to pandemic economy: Fisher investments was slow to adjust its sector allocations to capitalize on shifting consumer trends during lockdowns, such as the surge in e-commerce and remote working stocks.
– High cash balances: Fisher investments held significant cash awaiting a market correction, but the dip never materialized as monetary and fiscal stimulus boosted markets. This cash drag held back its performance versus a fully invested S&P 500.
Mixed outlook for Fisher investments’ future stock price performance
Looking ahead, Fisher investments’ near-term stock price performance will depend on:
– Value rotation: If oversold value stocks rebound, Fisher investments’ returns could improve on its value-oriented strategy. However, growth and tech remain market leaders for now.
– Market volatility: Elevated volatility could vindicate Fisher investments’ caution and cash holdings. But unprecedented stimulus could extend the rally.
– Asset inflows/outflows: Net outflows in assets under management after its underperformance could weigh on stock price. But performance tends to mean-revert.
In summary, Fisher investments faces an uphill battle to bounce back from its 2020 underperformance versus the S&P 500 index. Its heavy value strategy appears out of favor for now, but a value comeback could drive an improvement in its investment returns and stock price.
In 2020, Fisher investments’ stock returns significantly lagged the S&P 500 benchmark due to an overweight in underperforming value stocks, failure to adapt to pandemic trends, and high cash balances. Its future returns remain uncertain based on value/growth cycles and market volatility.