Pzena Investment Management CEO and portfolio manager Caroline Cai chats about the 18-year Vanguard-Pzena relationship, her firm’s active investment edge, and how human psychology affects value-style opportunities.
Pzena manages strategies for four Vanguard funds and is responsible for more than $10 billion in assets. Cai and her team manage the value sleeves of Vanguard Emerging Markets Select Stock Fund and Vanguard Global Equity Fund.
“We think good partnership is built on aligned fundamental beliefs,” said Cai. “The focus on excellence, on collaboration, good people, and good processes are all the things we see in our daily interaction with Vanguard.”
The Pzena process starts with a proprietary quantitative screening model that identifies businesses that have a profitable history but are experiencing a short-term issue or earnings slump. Then analysts take a deep dive into company fundamentals to see if it’s a good fit for the portfolio.
“The cyclical end of the market is still where we're finding a lot of opportunities…consumer discretionary, industrials, financial services, and technology,” said Cai. “But increasingly, we're starting to see some health care names coming into our opportunity set as well.”
Publication date: July 2023
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