Quarterly Commentary

4Q 2020


  • In 4Q20, the S&P 500 returned 12.15%; Russell 2000 returned 31.37%. For the year ending December 31, 2020, the S&P 500 returned 18.40%; Russell 2000 returned 19.96%. 
  • Recent commentary indicates accommodative monetary and fiscal policy, which have long provided a tailwind for equities, will continue.  In late August, the Federal Reserve adopted a new policy framework to allow inflation to run above 2%.[1]
  • A recent Brookings Institute panel featured a draft paper, “Reconsideration of Fiscal Policy in the Era of Low Interest Rates.”  Authors Jason Furman and Larry Summers argue that with structural low interest rates, the U.S. government can implement support of public sector spending for health care, education and a host of other programs without raising taxes or systemic risk.[2]  President-elect Joe Biden recently said, “Every major economist thinks we should be investing in deficit spending in order to generate economic growth.”[3]
  • During the 4th quarter, low-quality and value factors outperformed, while high-quality, momentum and low-volatility underperformed.[4] [5]
  • Top-performing industries were energy, materials, financials and consumer discretionary[6] as COVID-19 vaccines were approved and the market anticipated recovery from the pandemic recession.  Information technology continued to outperform. 


  • The Fund’s Institutional (NEAIX) and Retail classes (NEAGX) returned 22.32% and 22.06%, respectively, in 4Q20. In 2020, NEAIX returned 52.36% and NEAGX returned 51.39%, considerably outperforming the S&P 500’s 18.40% and Russell 2000’s 19.96%.
  • The Fund’s greater-than-benchmark exposure to high quality and low exposure to value factors hurt the Fund’s relative performance. [7][8]
  • The Fund’s 4Q20 relative underperformance was a result of underexposure to the strong consumer discretionary, financial services, materials, and energy sectors.  This same underexposure contributed to the Fund’s outperformance over 2020.
  • With 13% turnover, the Fund does not rotate into or out of sectors, but invests in companies we believe can outperform over the long-term.
  • The Fund’s top two contributors for 4Q20 were two of the largest positions, Entegris Inc. (ENTG) and Nova Measuring Instruments Ltd. (NVMI).  Entegris and Nova Measuring Instruments provide technology for advanced semiconductor manufacturing. 
  • None of the Fund’s positions were material detractors in 4Q20.


  • The Fund targets investments we perceive to have significant, unrecognized growth opportunities.  COVID-19 is hastening revolutionary development in technology and life sciences; the Fund is a long-term investor in companies that enable the research and manufacturing to bring these developments to market.
  • For years, we have been underweight in financials, utilities, commodity and consumer sectors. We believe our investments are less vulnerable to economic cycles.
  • Greater-than-benchmark exposure to high quality stocks positions the Fund for outperformance in future periods of market weakness.


1 https://www.marketwatch.com/story/fed-unanimously-adopts-new-strategy-widely-seen-as-leading-to-easier-policy-2020-08-27

[2] https://www.brookings.edu/events/fiscal-policy-advice-for-joe-biden-and-congress/

[3] https://www.nbcnews.com/politics/white-house/joe-biden-wants-set-aside-deficit-concerns-invest-ailing-u-n1253638

[4] https://research.ftserussell.com/products/downloads-research/FTSE_Russell_Monthly_Performance_Report_LCY.pdf?utm_source=marketmaps&utm_medium=email&utm_term=01aug2019&utm_campaign=gmr

[5] Source: S&P Dow Jones Indices LLC and/or its affiliates. Data as of December 31, 2020

[6] Factset, 2 Factor Brinson Attribution for NEAGX vs. Russell 2000 ETF for 4Q20.

[7] https://www.morningstar.com/funds/xnas/neagx/portfolio

[8] https://research.ftserussell.com/products/downloads-research/FTSE_Russell_Monthly_Performance_Report_LCY.pdf#page=5