Active Equities

Always Inspired

Equity Income Fund (PEYAX)

Overall Morningstar Rating™ of

I believe investors want performance that is consistently good rather than occasionally great. This takes risk controls and a strategic approach to dividends.

  • Darren Jaroch, CFA
  • Portfolio Manager

Overall Morningstar ratings as of 10/31/18, shown with the Morningstar category and the number of funds in each category.

Fundamental research provides a proactive view

“When you think about the market with a perspective of a couple of years, the type of stocks you want to own changes over time, and that’s why we take an active approach rather than the more limiting, static view of an index.”

  • Darren Jaroch, CFA
  • Portfolio Manager

Predicting earnings surprises can lead to powerful results

Stocks with the largest positive year-over-year earnings increases relative to their forecasted earnings at the start of the year have in the past tended to perform dramatically better than stocks with negative earnings surprises (Figure 1). Consequently, successfully predicting big earnings surprises – and avoiding the largest negative-surprise stocks – appears to carry big potential rewards.

Finding an earnings surprise early, before the surprise becomes a known quantity, can yield additional returns. Figure 2 shows how the potential rewards increase with the length of the forecast horizon. Being accurate in forecasting the biggest positive earnings surprises 12 months in advance, for example, could potentially deliver a much higher return than making the same forecast only three months in advance of the relevant earnings announcements.

Predicting earnings surprises can lead to powerful results
Earlier anticipation of earnings surprises pays off

Equity Income Fund (PEIYX)

Morningstar Ratings as of 10/31/18

Time period Funds in category Morningstar Rating
Overall 1,089
3 yrs. 1,089
5 yrs. 932
10 yrs. 678
Morningstar category: Large Value