Monthly Strategy Update: Coho ESG US Large Cap Equities
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Good morning *|FNAME|*,

We organise a webinar: August 21 at 15.00h CET, Coho ESG US Equity Q2 update webinar click here to register, also Coho has just released their ESG Impact report of July 2019, click here to see the latest report.

Before stating the performance of the Coho fund in July, it is much more interesting to show how the strategy has performed MTD. A period when markets were quite negative after reignited trade war worries.
MTD Coho ESG US LC Fund : -1.95% (Net of fees and in USD)
MTD S&P 500                         : -3.20%
MTD S&P 500 Value               : -3.92%
(Data as of 7-8-2019)

July commentary:
The Coho ESG US Large Cap fund was up 1.3% for the month of July, broadly in line with the S&P 500 Index gain of 1.4% and compared to the S&P 500 Value Index increase of 1.8%. We continued to see the economically sensitive sectors lead performance, with Communication Services and Information Technology being the two best performing sectors, each rising more than 3%. Health Care and Energy were the laggards, both down more than 1%.

Less volatile stocks are inherently less exposed to market booms and busts. They won’t soar as high in bull markets, but they generally won’t fall as much in crashes and, thus, have less to make back when the market recovers. As a result, these “Steady Eddies” typically compound more of their gains over a full market cycle. Why hasn’t it been arbitraged away? The answer lies in the deeply ingrained behavioral biases and agency issues that cause investors to consistently overvalue highly volatile stocks and to overlook their stodgier counter-parts. Overconfidence and a tendency to chase performance often lead investors to pile into hot stocks at precisely the wrong time."

As much as it hurts performance year to date, we simply, as always stick to the way we invested for almost 20 years that created superior returns, low volatility and a downmarket capture of 65-75%. 

"Contrary to conventional wisdom, research shows that less volatile stocks tend to beat the market over the long term, in part by losing less in downturns. As a result, the Coho portfolio as a whole has become very attractive from a relative valuation point of view. The gab in forward 4 quarter P/E vs the S&P 500 is the widest it has been. Click here to see the history.

here for the complete commentary.

I am around August 19, Denmark; August 20, Finland; August 21, Sweden; August 22, Denmark to present the strategy. Just reply to this email.

Hereby 3 charts that show that;

1) Economically sensitive weight within the S&P 500 is at an all time high now, higher than during the IT boom in 2000. Coho has always had a contrarian allocation.

2) We have been in a record period of over 10 years of strong relative returns for the growth style of investing, which tends to pay much less attention to valuation and put much more weight on future growth prospects. While we seek long-term earnings growth equal to or slightly better than the indices for our holdings, we make sure it is within the context of reasonable valuations to help ensure we can protect principal when markets reverse.    

3) Cycles always come to an end. The Coho strategy of quality companies with predictable earnings growth, offered protection during the IT crash in 2001, the financial crisis in 2008, the Euro crisis in 2011 and recently during Q4 of 2018.



Coho's consistent long term track record, true to style resulted in an annualized outperformance of 3.4% over the S&P 500 Total Return index, since inception in 2000



Year-to-date returns now stand at 20.2% for the S&P 500 Index and 18.8% for the S&P 500 Value Index.  The return for the Coho ESG US LC Equity fund is 10.31% (Net of fees, USD and as of 31-7-2019). We discussed the headwinds to performance for the Coho portfolio in the mid-year letter and noted how our disciplined process and philosophy struggle to keep pace in periods of such rapid market appreciation.

We are now at the point of the second quarter earnings season where about two-thirds of the portfolio’s holdings have reported and overall, the results and outlooks have been encouraging. While the Health Care sector is lagging year-to-date, all six health-care companies in the portfolio exceeded second quarter expectations and importantly, raised full-year guidance. The political overhang may remain in the news as we build up to the 2020 Presidential election; nonetheless, we are staying focused on those companies delivering innovation and/or helping to limit health-care costs for the consumer. Examples of the former include Merck & Co., Abbott Laboratories, Johnson & Johnson, and Amgen, Inc. while UnitedHealth Group, Inc. and CVS fit in the latter category. Johnson & Johnson’s recent earnings release highlighted the strength of the franchise as despite 6% decline in net pharmaceutical pricing, the company grew segment revenue by 4% and reaffirmed 7-10% growth in operational earnings per share for the year.

We attempt to address the reason for this disparity below or click
here for the complete commentary.

We also organise a webinar:

August 21 at 15.00h CET, Coho ESG US Equity Q2 update webinar click here to register

The Coho ESG US Equity strategy only deviates marginally from the original Coho Relative Value strategy. The ESG approach is fully integrated in the investment process while keeping the original characteristics in place. A daily liquid UCITS fund of USD 200 million is available for European investors: ISIN: IE00BF1XKT19

Coho is one of the few US equity managers that has ESG fully integrated in its investment process:




Coho ESG US Large Cap Equities 
The Coho Relative Value Equity (CRVE) strategy has an annualized outperformance of 3.4% over the S&P 500 Total Return index, since inception in 2000. Coho ranks 13th percentile in eVestment. This strategy of quality companies with predictable earnings growth, offered protection during the IT crash in 2001, the financial crisis in 2008, the Euro crisis in 2011 and recently during Q4 of 2018. The strategy is fully invested, without using of derivatives. Over the last 18+ years, the down-market capture has been 71.86%, the up-market capture 87.57%. This combination resulted in superior performance with lower risk versus the benchmark and most peers. While keeping the characteristics of the CRVE strategy in place, the ESG portfolio was established in 2011. Coho Partners manages about USD 7.8 billion in US Large cap Equities. Coho is an independent firm, employee owned. The valuation of the Coho strategy versus the S&P 500 has become relative attractive after the outperformance of economic sensitive stocks. This defensive strategy is a strong candidate in an environment of gradual rising, steady or declining markets.



Performance and StD since inception in 2000 vs S&P 500TR and peers:




  • Coho is UN PRI signatory, the fund has ESG fully integrated in their investment strategy. Please click here for the latest presentation.
  • The Sin Free/ESG track record dates back till 2011. Sin Free is the predecessor of the ESG strategy. As of January 2018 the Sin Free portfolio changed its name into ESG.
  • The Coho ESG US Large Cap strategy ranks 6th% when it comes to ESG score according to Morningstar 30/6/2019. (Morningstar/Sustainalitics globes). Click here for the latest Morningstar Globe ranking.
  • Coho actively engages with the companies in the Coho ESG 200 universe to better understand their commitment to ESG issues and to advocate for positive change.
  • Coho actively seeks increased transparency through more frequent and robust disclosure and through establishment of tangible goals.
  • Coho measures it’s impact via an impact report, please click here for the most recent impact report.
  • The Coho ESG US Large Cap Equity strategy measures the carbon footprint, water usage, % women in the board of their holdings, ESG disclosure score of holdings in the portfolio (figure 1 below).
  • Needles to say Coho excludes tobacco, cluster bombs.

Figure 1:

Data as of 30-6-2019

Valuation and Firm/strategy 

  • Coho is a stable, employee owned firm, no analyst or PM has ever left the firm since start in the year 2000.
  • Focus is on one strategy only, true to style since inception in the year 2000 with a low turnover (15-20% per year) and low standard deviation (figure 2 below).

Figure 2:

  • Long term since 2000, over multiple cycles 3.4% annualized outperformance over the S&P 500 and 2.51% over the Russell 1000 Value, beating peers, with a lower risk profile. (Data as of 31-7-2019) Click here for the presentation Coho vs Peers.
  • Assets under management of the firm are about 7 Billion USD, plenty of capacity left as they invest in US Large Cap.
  • Broad client base, to name a few: SEI, Russell, two Nordic pension funds.
  • Focus on capital preservation, predictable pattern of return, aiming for a down market capture of 65-75% (figure 3 below).
  • After 9 years into the bull market a correction may occur in which Coho is expected to outperform (down market capture 65-75%) if rally continues Coho is expected to capture most of the upside (figure 3 below).

Figure 3: Participate in mature bull markets, benefit from low downside capture

Figure 4: Relative valuations of the Coho ESG US Large Cap portfolio vs. the S&P 500 in terms of Forward 12-month P/E. In blue Coho ESG Large Cap Equities in green S&P 500




Coho ESG US LC Equity Composite data                                    Coho ESG US LC Equity Fund Facts














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United States

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as of 30-6-2019





Data as of 31-7-2019 source eVestment



The Coho strategy offered protection during the IT crash in 2001, the financial crisis in 2008, the Euro crisis in 2011. Historical downmarket capture over the last 17 years has been 71.86%. This in combination with an upmarket capture of 87.52% results in superior performance versus benchmarks and peers with an annualized outperformance of 3.4% since inception over the S&P 500 Total Return index. The strategy is available in a UCITS fund with ESG integrated in the process. Please follow the institutional share class of the Irish based UCITS fund via: ISIN: IE00BF1XKT19 and Bloomberg Ticker: COHIUSD.



Best regards,




Performances are annualised. The latest data is still preliminary. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate.. "This email is intended to be reviewed by only the intended recipient and may contain information that is privileged and/or confidential. If you are not the intended recipient, you are hereby notified that any review, use, dissemination, disclosure or copying of this email and its attachments, if any, is strictly prohibited. If you have received this email in error, please immediately notify the sender by return email and delete this email from your system."
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