How has Aziz navigated the market disruption?

In this Q&A Aziz Hamzaogullari, Founder, Chief Investment Officer and Portfolio Manager of Loomis Sayles’ Growth Equity Strategies Team (GES Team), discusses the recent market volatility and how it has impacted the GES Team’s investment strategies and portfolio holdings. The Team believes that market volatility is inevitable, but unpredictable, so they must be ready every day to take advantage of these moments when they occur.

Loomis Sayles is currently celebrating its hundred-year anniversary and the GES Team its 20^th.

AI is perceived as a threat for software companies. You've got some of these companies in your portfolios like Salesforce, Autodesk and Workday. How are you thinking about that?

AH: Remember the disruption last year when DeepSeek, a Chinese company, came out and said, " we can do what others do with 90% less cost". People thought AI spending was over, that companies such as Meta and Amazon would spend 90% less because of the disruption that we had with DeepSeek. The way we make our decisions is not by reading the Financial Times and Wall Street Journal articles. We talk to the real decision-makers.

When DeepSeek happened, we called Amazon, Meta, Microsoft and Google, and we asked a simple question: "What does DeepSeek mean to you? Will you spend less money because of this innovation?" And they all said the same thing: " DeepSeek just solved yesterday's problem." Similarly, all these companies like Salesforce, Autodesk and Meta, are solving tomorrow's problems, not yesterday's problems. 

And in the same way, you have this worry that AI is going to stop software - and it will for those companies that don't have differentiated products. That's why you have all these fears spilling over now in private credit. All these private credit firms invested in these software companies thinking that they were great businesses. Some of them may be great businesses, but others will be disrupted and others may not even exist because they don't have differentiated products.

There are general worries among investors about concentration in global and US indices. Are you concerned about concentration in your portfolios?

AH : If you look at our concentration in the past 20 years, and if you look at our top 10 holdings, you see that we consistently had a much higher concentration than our peers, because we believe that we can get the diversification that we need with 30 to 40 names. You are able to diversify away +90% of the diversifiable risk with 30 to 40 names. There's no point in adding another 100 names or 50 names because you're not getting any incremental benefit from that.

And one thing that we look at is our active share versus our peers. With this concentration increasing, what we found is, as the concentration of the index increased in the past five years or so, the active share of most managers declined meaningfully. However we are still around the top decile in terms of our concentration versus our peer group. 

More importantly, our overlap with our peer group is around 33%, despite Magnificent 7 concentration, which means that two-thirds of our portfolio is different than our peer group. We have not found any single manager that overlapped with us among our peers 20 years in a row. The highest one was eight times out of 20 years.

After several years of outperformance, your portfolios’ relative returns turned negative later in 2025 and early 2026. What time periods do you think investors should use to judge a manager's performance?

AH: You're right. After outperforming in 2022, 23, 24, we underperformed in the second half of 2025, but despite that, for four years combined, we still outperformed the benchmark by over 240 basis points in large cap growth**. 

When you look at all categories and all managers and look at their returns over a 20-year timeframe, what percent of the time do they outperform, and what percent of the time do they underperform? It's really striking. One year is a flip of a coin for all managers. It's literally 50/50. Over three years, five years, 10 years, you should expect a skillful manager to do better and better.

If you look at our large cap growth peer group, we find that overall, managers' outperformance declines as time horizon extends. So, on a one-year basis there's a higher chance of a manager outperforming than on a 10-year basis. On a 10-year basis, I think 70-80% of managers underperform the index. Whereas on a 10-year basis, when you look at rolling returns[i], we outperformed our peers on large cap growth 100% of the time. On three years, we outperformed two-thirds of the time. On one year, we outperformed a little over half of the time***.

So we believe that it's best to look at rolling returns so that you don't fall into the trap of buying someone who really did well recently, but didn't do well over rolling periods in a consistent manner.

Interview conducted on 2 April, 2026