This Value Fund Likes Walmart Stock

This Value Fund Likes Walmart Stock

A recent article in Barron’s profiles Pioneer Investments lead manager and value investor Jeff Kripke, who took over the firm’s 92-year-old flagship portfolio (the $6 billion Pioneer Fund) in 2015 and tweaked its ESG (environmental, social and governance) investing approach.

Kripke reduced the number of portfolio holdings by more than half (to 45) and made ESG “a focal point of the strategy,” the article reports, adding, “In 2018, the fund’s ESG mandate became more explicit: It is prohibited from owning stocks that rank in the bottom 15% of their industries and bottom 30% of the S&P 500 index based on ESG research from its parent firm, France-based Amundi, and MSCI ESG data.”

The article notes that Kripke’s portfolio updates helped “avoid idiosyncratic risk” and “identify high-quality companies that hold up better in market downdrafts.” Over the last five years, Kripke says the fund has outperformed in 11 of the 13 broader market corrections, with his fund returning an average of 15.2% annually.

Kripke cites Walmart, which the fund purchased in 2019,  as an example of a company with improving ESG practices: “They’ve gone from being the poster child of a terrible company” for workplace equality, he says, to one that is upping its ESG game with respect to employee pay, career opportunities, diversity and environmental efforts. According to Kripke, the company is aiming to be “net carbon neutral by 2040.”

“At a time when growth seems to be the only game in town,” the article says Kripke, who was a student of value investing at Columbia Business School—has continued Pioneer founder Phil Carret’s value philosophy. He explains, “Every investment needs to offer twice the upside opportunity relative to downside risk.”