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Vaughan Nelson

US Select Equity

High conviction, concentrated US equity investing

The Philosophy

A concentrated, high-conviction, US equity approach which typically holds 20 to 40 securities. The strategy seeks a targeted return by investing in companies with at least one of three attributes:

 

Undervalued earnings growth (earning above its cost of capital)

Undervalued assets (trading at a significant discount to asset value with an identifiable catalyst to close the gap)

Undervalued yield (offering attractive dividend yield with minimal risk)

Diversifying between these three sources of potential upside improves the team’s chances of performing well throughout the market cycle.

Reasons to consider

From an investible universe of thousands, only 20 – 40 companies make the cut at any point in time. This concentration means the fund performs differently to the S&P 500 and only includes companies which the team believes have the most attractive risk to reward ratio.

The companies in the fund are chosen as a result of the team’s own bottom-up fundamental research. Stock picks are partly driven by analysing capital flows in each industry to understand which companies in a particular industry are likely to out-perform their competitors.

The team buys companies it believes can deliver significant returns in a three-year cycle, rather than beating a specific benchmark. 

To supplement the team’s fundamental analysis of each stock, they identify the underlying factors driving the success and failure of each company and also apply a macroeconomic risk overlay. The team analyses this at a total portfolio level to mitigate unintended lack of diversification and overexposure to single drivers of risk or return, going far beyond simplistic industry sector analysis. 

What will never change in our strategy is our disciplined approach to generating attractive returns on capital from idiosyncratic drivers. Every stock we add to the portfolio always aims to simultaneously enhance returns and reduce risk.”
– Scott Weber, Lead Senior Portfolio Manager, Vaughan Nelson Investment Management

The analyses and opinions referenced herein represent the subjective views of the author(s) as referenced, are as of the date shown and are subject to change without prior notice.

Risks to consider

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income and alternative investments. There is no assurance than any investment will meet its performance objectives or that losses will be avoided. There could be other differences across similar products in the same strategy. Investors should fully understand the risks and other relevant details associated with any investment prior to investing.

The team

Scott J. Weber, CFA
Senior Portfolio Manager
Vaughan Nelson Investment Management
Chris D. Wallis, CFA, CPA
CEO, CIO, Senior Portfolio Manager
Vaughan Nelson Investment Management

The firm

Vaughan Nelson manages high-conviction, high active share portfolios – all of which follow the same value-oriented investment approach and belief that temporary inefficiencies and time arbitrage create long-term opportunities. The firm manages equity strategies across market capitalizations and domestic fixed income – offered in a variety of investment types, including mutual funds, ETFs, separately managed accounts, and collective trusts.

Houston

Texas, USA

55*

Employees

*As of June 30, 2025 

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