by William Watts
Market Watch
Stocks left behind as the COVID-19 pandemic forced the economy into a virtual shutdown are showing signs of life. That’s justifiable, but investors should look before they rotate into the most beaten-down sectors.
“Often times, the greatest bargains will be found among businesses that are…in the center of the fire, so it could be good to lean into problematic cyclical areas, but you need to do it in a careful way,” said Brian Yacktman, founder of Austin-based YCG Investments and co-manager of the $358 million YCH Enhanced fund. The fund has delivered an average annual return of 10.5% over the last five years, according to Morningstar, beating 95% of its large-blend category peers and outpacing the Russell 1000 by 0.84 percentage point.
Yacktman, in a phone interview, argued that since it’s difficult to gauge just how long the pandemic will continue to throttle the economy, investors would be wise to shy away from shares of capital-intensive, highly leveraged companies.