FOCUS 2026: Building resilient portfolios with dividend strategies

Glen Davidson: Morningstar came out with something this year and they said, you know what, you're gold medal. They always like to say nice things about you and they said it's because of the downside protection, the steady unitholder focused approach that you have and your consistency. How does that make you feel? Gold medal winner, it's pretty nice. We should talk about your process because underlying that is a lot that you've learned over the years but a lot that you bring to investing. It's worked out very, very well. Could you please remind everybody about your approach to investing.

Ramona Persaud: Thank you for the opening question. I sort of stumbled on that.

Glen Davidson: You're shy now, aren't you?

Ramona Persaud: Yeah. So you're good about moving on from that, thank you. Before starting with process I'll start with what I'm trying to accomplish. I don't just want returns, excess returns, I want very high quality returns. The way that I define that quality is what do those returns look like? Are they very, very volatile or not very volatile? It really centres around risk and volatility because my end investor who cares about taking income off of the return stream gets unnerved when that return stream is quite volatile. If they want a steady source of income, or even that income compounding in the return stream, it's really important for it to be very smooth. I'm not just going after excess return, I'm going after access return that is fairly consistent and smooth. That drives a very heavy risk sensitivity where when I'm looking at any given stock and trying to construct a portfolio I want stocks that when I put them together I can just get a return stream that over a long period of time compounds really beautifully and sustainably into smooth returns.

There's a metric called the information ratio which is your excess return over your relative tracking error, if you will. My goal is to not just hit the numerator of that but also hit the denominator in such a way that that information ratio is pretty good over time. That's your risk-adjusted returns. That's my goal. The process is very much focused on high quality companies where dividends or cash flows are both high but also sustainable and not especially volatile so the dividend stream and the return stream off of those cash flows is pretty predictable and smooth. Valuation is a big part of getting there.

Glen Davidson: At what point in your career did you become very dividend focused?

Ramona Persaud: I've always been, I've been trying to open this the whole time, I have always been very valuation focused. I think that's intrinsic to probably who I am as a person. When I came into this business I also covered what are considered value sectors. I covered lots of different cyclicals and then I covered banks in the financial crisis and then I went to Europe and Europe was falling apart. Everywhere I've gone has had a lot of value in it which reinforce elements of my intrinsic personality. Dividends were more of an outcome of that or a subset of that. My core orientation is towards finding a good amount of value in whatever it is that I'm pursuing. There are times when value and income are not aligned. For instance, there was a time in the market about 10 years ago when there was no income to be gotten from anywhere in the world, rates were close to or at zero and some places they were sort of technically negative and people were chasing yield. Any company or stock in the marketplace that had a higher yield than average got very expensive.

The example that I give is Campbell Soup, was like a 25 times earnings, 23, 25 times earnings, and Google which was growing a lot faster was at, and this was 10 years ago, was at 18 times earnings. There are times that value is not always in income and then I will lean away from income because the minute you get very expensive you're introducing a lot of risk to your return stream.

Glen Davidson: I'd like to get into your mandates but not yet. There's so much chaos in the market I want to go back to something you've talked a lot about in the past from an audio kind of standpoint. That is signal to noise ratio. It seems to me there's a lot of crosstalk out  there now. How do you even find the signal anymore with all the noise?

Ramona Persaud: There's a lot of noise.

Glen Davidson: We talked about that with Andrew Marchese today as well, that phrase. I mean, it's something that you're always trying to dive into.

Ramona Persaud: It's a very engineering term, signal to noise, but it applies to everything. If I were to step really far back, I see the market for certainly the last two years as more exogenously driven than usual. That just means less predictable. The drivers, the things that are moving the market are just all over the place and fairly headline driven and very policy and administratively and geopolitical, all this stuff that is not directly fundamental. It certainly impacts fundamentals but it's not directly fundamental. It's not normal. In a much more exogenous market than average that just means there's a lot of noise. No one here can say what the headline is going to be this afternoon, let alone tomorrow or a month from now. No one could have predicted really the headlines of so far year-to-date the headlines of last year. In a market like that signal is much much harder to find, and signal is what really ultimately matters to long term returns.

In markets like that I really believe you're not getting paid to be super active, you're getting paid to just sit and wait and to have enough humility and experience to know signal when you see it but to understand that it's not a signal-rich market, it's not a target-rich market. You're just kind of recognizing, most everything that's coming at you, ultimately, as noise. That's what I've been doing. We're in earnings, we are coming out of earnings period right now and earnings is a good place to just wait for things to blow up and get stocks that are down 10%, 15%, 20% as part of where you can wait and find opportunities.

Glen Davidson: Two questions based on that. One, you said that this is unusual, the noise that you're seeing, these shocks in the market. Is this the new norm, do you think, first of all? In particular, because of the flow of social media, the flow of media overall, AI-generated things that maybe get people wound up that are or aren't accurate.

Ramona Persaud: I think markets are still at the margin driven humans. Humans, for the foreseeable future are still emotional creatures, and I don't mean that disparagingly, it just is what it is. If the market at the margin is human driven that's not necessarily true for the foreseeable future, and humans are emotional then the market is, essentially, emotionally driven. Will this be the new norm in terms of being a very noisy market? I think it comes and goes. What we can depend on every day, at least for our investing lifetimes, is that when you get a lot of emotion driving how securities are priced you get a lot of opportunity. I actually think in a noisier market as grinding, I found returns much more grinding in the sense that you have to be very still.

I can't sit here without ... I am mentally a very still person but physically not so I have to remind myself that it's noisier than usual, it's always emotional and it requires leaning into any natural, mental stillness that you have. It also helps to be really busy in life, to have a lot of different sources of activity in life, that makes the waiting easier. Is it the new normal? You can't say but for the time being you can get a lot of opportunity by just waiting.

Glen Davidson: I sense that you have excitement about a lot of the craziness in the market and the opportunities that are presenting themselves to you. Did earnings last week create opportunity for you?

Ramona Persaud: Yes, lots.

Glen Davidson: Why?

Ramona Persaud: Because we're in a market that doesn't really know what's going to happen this afternoon, and that's kind of crazy. That's not normal. It's a very easily unnerved collection of humans, if you will, or humans at the margin that don't know what is coming next. When that's the case there is a way that ... you're not grounded in sort of first principles, you're not ground in  fundamentals so you get extra emotionality in the way stocks are priced. In the last few weeks there've been lots of bigger than usual reactions to disappointments, which if you've known companies for a very long time you can then take advantage of that.

That being said, when you look at valuation differences or valuation dispersions across the entire marketplace there's not a ton of dispersion from a top-down level. If you look at the market itself differences in prices on balance are not very large. You're sitting and waiting, or you're having to go several layers down to figure out where the big valuation differences are which, in the example of when you're inside of earnings season you end up with stock by stock by stock waiting. When I see a stock that's down 10, 20% in the backdrop of there not being a lot of valuation dispersion across the market that's very exciting.

Glen Davidson: Can you give us an aggregate of vibe that you got from earnings last week? Is there a consensus, is there a direction, is there discouraging or encouraging that you could share with us?

Ramona Persaud: I think right now the market has this oscillating quality the last couple of years between what I've characterized as glamour and not glamour. All the AI stuff is very glamorous and the market will either decide that we are now back on being very economically sensitive and into all the stuff that's not glamour, or the minute the economically sensitive stuff just wobbles a little bit we go straight back into glamour. I viewed that as like an accordion, just kind of in and out, or an oscillation, that's very unpredictable. In terms of earnings last week does the market truly care about ... I didn't think the market was really thinking about individual company fundamentals as much as it was thinking about you've got this massive driver that's glamour and everything else is not glamour, and because it is accounting for such a big part of earnings that's where the momentum is.

It's the kind of market where I essentially measure how much concentration and momentum in statistical terms. When momentum gets to two to three standard deviations away from what is normal, or two to three centre deviations in concentration away from what's normal, that tends to be a tipping point back into anti-glamour. Relative to my 20-something years of investing a strange market in that is it is so easily perturbed and it just moves in and out from one thing to the next. In those moments you just get massive sell-offs and that's when the waiting pays off.

Glen Davidson: You're an oscillating portfolio manager on both sides.

Ramona Persaud: I am a statistical measure of oscillation right now.

Glen Davidson: And are you finding more opportunities within the US or globally right now?

Ramona Persaud: That's one place where dispersion has actually been pretty interesting. We are in May so about 18 months ago the valuation difference between US and non-US, this was at the end of 2024, became pretty extreme. In statistical terms it got to about three standard deviations, which is very big signal. Three standard deviations if you've got a normal curve is, I don't know, 2% or something. It's a very low proportion of the distribution. If you believe in a certain degree of mean reversion by the time you get to such a low signal, if you will, your odds of coming back into the fat part of the curve are higher, if you will, so you wait. There's a ton of signal around two to three standard deviations of anything if you can assume a normal distribution. For the longest time when that had been hanging out around one to two standard deviators the US was just growing so much faster than the rest of the world, and specifically than Europe, that it didn't matter. Once you tipped into that ... I think a lot in terms of  tipping points, certainly in a market that is as unpredictable as this one, once you got there all of a sudden Europe specifically was cheap enough.

So there'd been this huge question the prior 10 years coming out of the global financial crisis when the US just took off in growth relative to certainly Europe about at what valuation difference would it really matter. I'm telling you this because today ... that valuation difference has persisted and it's one of the only ones that's persisted in all the different things you can measure. It's persisted today, it's not quite as large so you have to be more discerning but yes, to answer your actual question, that was the buildup to the question, there is a lot more outside of the US than in the US. Outside of US I can be more of a stock picker. Inside of the US and in my US funds I am much more of a portfolio construction person that's extremely patient.

Glen Davidson: Meaning that within the US you're looking at sectors whereas when you're outside of the US you're looking at stocks that then add up to being in certain economies.

Ramona Persaud: Meaning outside of the US there is enough valuation disparity that you can stock pick. There's enough this versus this is so much cheaper than normal that I can easily buy this from a stock picking perspective. Inside of the US, the US is extremely large now, quite efficient, very well understood so valuation differences are less persistent. You've essentially got to wait a really long time and really construct around that. What I found by running both global and US strategies, I found that they require somewhat different approaches. In income-oriented strategies I'm hanging out in mega-cap and large-cap land. I'm not really in small-cap and mid-cap a lot. In mega and large, they're so well understood that you're not going to get your edge from earnings differences. You've got 40 different people on the sell side looking at any one company so the earnings dispersion is very tight.

You're going to get your edge from emotionality. In any one moment, when something with very tightly dispersed valuation is like this normally and something happens in the world that causes a big gapping out, that's when you win in the US in large and mega-cap. So lots of patience. Outside of the US the range of capitalization is much broader. So I can buy stuff all over the world that you've only got two people looking at it. Japan small-cap or I've owned stuff in Nigeria or Kenya or even in Europe there is enough dispersion so I can stock pick much more actively than construct. I found depending on the efficiency of the market you're either constructing or stock picking or both with varying degrees of each.

Glen Davidson: You can go to any capitalization that you want.

Ramona Persaud: Any.

Glen Davidson: You said if you went to some of those markets there was only a couple of people, you mean as far as the marketplace.

Ramona Persaud: Yeah.

Glen Davidson: You've got the ability very few firms do. Do you travel out to a lot of these areas?

Ramona Persaud: Yes. I've been running diversified money for about 15 years now. When I first started doing that I was based in London which is sort of the centre of the world from a travel perspective so you can kind of get anywhere in a short amount of time, including Asia. I used those years to really go everywhere to learn companies. Once you learn them, especially in large and mega-cap land, they don't change that much. I sort of invested in that learning in those first few years. Now when I go back, I spent a summer in London a couple years ago to reconnect with the analysts but also reconnect with companies, you're just doing a refresher. I'm back in Europe in a couple of weeks to do a big conference meeting like all European companies. There's a lot of stuff you can do in Asia. Now my travel is much more precise, targeted and surgical and it's based on where the valuation opportunities are, as opposed to 10, 15 years ago it was like go everywhere and learn everything.

Glen Davidson: It's important for you, I'm sure, to go and see those analysts because they need to know ... what do you expect from them? They're going to a lot of different portfolio managers with ideas but they need to know what makes you tick. Quite frankly, you don't have the time to be dealing with folks that don't get you so it's important that you do make that connection, I am sure.

Ramona Persaud: Yeah, my style is very weird. It is weird. I am an odd duck and I own that. I didn't really realize that until the last 5 to 10 years. I just do it very differently. It's very statistical, very quantitative and very fundamental. It's quite mosaic. That's different from a typical analyst that's quite fundamentally oriented with a little bit of valuation. What's happened since the global financial crisis is rates essentially got so distorted. We were already in three decades of rates coming down. They were coming down at like this slope and then the global finance crisis hit and the slope went like that. The rate of decline accelerated. That had all kinds of implications for how you value securities. That's why the US in terms of growth took off relative to the rest of the world because the monetary policy was the most sort of extreme in the US, as was the regulation. The regulation response was not as strong in the US to the banks as it was in Europe so US growth took off.

What that has also meant, the dark side of that is I think analysis has lost valuation discipline because valuation in a world of accelerated decline in rates valuation is less valued, if that makes sense. In a world starting with FAANG and then into all the different acronyms, what's the acronym now, Mag-7 or whatever, there is no valuation discipline. To be a value-oriented person and to run value-orientated strategies and win, it was quite challenging both in terms of what was winning in the market versus how to make those funds win with the third part of that triangle being research that wasn't valuation sensitive.

The only reason I'm saying all of this is because working with research when you're so different from what the market is rewarding you either give up, which you can't, or you try to figure out how to bring some valuation discipline back. One of the reasons that I went to London that summer was to try to bring some valuation discipline back. One of the things that we did was sit down and just do deep dives on how to think about valuation for my kinds of portfolios. I try to teach the statistical approach to stock picking. What I've been really pleased with is now when I get pitches from analysts for stocks they talk in standard deviation terms. 

Glen Davidson: They figured you out.

Ramona Persaud: A little bit, yeah, but it took investing for a few months, going to the office and sitting and reconnecting those relationships. You have to start with the connection before you launch into the really intimidating sort of like we're going to talk about statistical analysis now. It had to be like relationship building which you know all about from your career, before getting into stuff that's quite terrifying, which is valuation.

Glen Davidson: The so-called weird style that you said about yourself, it sounds like you are Fidelity because you've got some technical, some fundamental and some quantitative all rolled into Ramona, which is pretty interesting, which not everybody does but those analysts have figured you out. Do you have some sectors that you can run us through and your thoughts, let's start with financials as an example. Is that an area that you've got some strong thoughts on today?

Ramona Persaud: The way that I've been thinking about these last couple of years of a more exogenous type market, markets that are less predictable where you don't know what's going to happen this afternoon, is you're not really being paid to be super active, at least in my world where the volatility of the return stream is really the end investor is highly sensitized to the volatility return stream. What I've decided in these last couple of years is if I'm not being paid to be super active because valuation dispersions are quite flat then I'm going to just diversify a lot. So I've got a lot of different ways to win because if we don't know what's going to happen tomorrow I've gotta have what I call a lot of anti-correlation in my portfolios.

I've have got a little bit of glamour because there are times when the market oscillates back very strongly into glamour, and I've got a lot of just really cheap or turnarounds in a market that's very exogenous having what we call idiosyncratic sources of alpha, and that's just a fancy way of saying companies that are more in charge of their destiny than average. Companies that are not just being driven by the market being flung around by headlines but they're doing something internally that can improve themselves. Those are typically turnarounds.

I have all kinds of different buckets that when the market is rewarding this I've got enough buckets over here that are getting rewarded and this stuff is getting crushed but together there's like a hedging or an anti-correlation that works. If I've gotten enough of that the fund can power through, all of the funds can power through irrespective of the environment. That's been my approach. In terms of financials, financials have this way currently of being a little bit of anti-AI in the sense that they're economically sensitive. They care a lot about credit and interest rates. That's not entirely disconnected from AI but it's far enough apart that I can treat that as my anti-glamour that will work when the glamour stuff is super-concentrated and super-momentum. Around the world there's decent valuations across the world that I can have enough financials exposure.

A good part of financials that has been kind of apathy when AI has been really working is P&C insurance. They've had a little bit of a cycle, they've had pricing, they're very boring, they're like the staples of financials. There are times that they get really cheap. Inside of financials as well there's some areas that have a bit of AI dislocation in them. I view that as anti-glamour and that can be anti-correlation when the glamour stuff is working. I've got large-cap healthcare. Pharma has been very unglamorous. There was a time last year when you could buy that at eight times earnings. You could buy reasonable pipelines and we have very good healthcare research. You could get decent enough pipelines for single digit multiples of earnings. I'm looking for areas like that. There's a lot of them that are popping up all over. There's a of AI dislocation so a lot AI is going to kill this business that gets very de-rated. To some extent you can wait until it gets cheap enough that you don't really need to predict what AI will do to it or not do to, it's just cheap enough.

Glen Davidson: Taiwan Semi is in your top 10. You've been a part of Taiwan Semi for a long time. Can you talk about that and what you've learned over the years, too.

Ramona Persaud: I first met that company when I was living in London and I'd go to Japan and Hong Kong a lot to figure out Asia. I was really struck even then by just how different that company was. It was a bit of a challenge. Intel versus Taiwan Semi has been like this incumbent challenger situation for the last couple decades. They basically took the market from Intel. They did so by being what the best challengers always are, just hungry and dedicated and driven. I saw that when I first started meeting with them, like, I relate to this. This is very straightforward. It was an oligopolistic business and so, that is caught up in the AI theme, and what I measure now when I meet Taiwan Semi is are they still hungry because they are now the incumbent. When we think about Intel and we meet Intel, which has been on a tear recently, I look for are you still complacent or are you getting hungrier? You can't really measure that but you can hear it.

Glen Davidson: There's a baseline that you've set.

Ramona Persaud: Yeah. With Taiwan Semi, they're still really hungry, they've extended their moat, if you will, or their lead with the competition. They understand that they have to keep extending that. You can't just keep it fixed, it has to keep growing. There are times that the market gets so emotional, if you will, that you can buy it under 20 times earnings. That's what's allowed that position to maintain a sort of good cost basis and continue compounding in the portfolio.

Glen Davidson: Interesting. Question's come in from an audience member about something in your top 10, Gilead Science.

Ramona Persaud: Gilead. Gilead was really cheap for a really long time. The pipeline was sort of wobbly and what's happened quietly is the pipeline has gotten stronger and stronger. There are these moments that a company can be improving in a way that the market doesn't recognize because the company has been forgotten. It's really amazing when that happens, when the market's really fixated on, say, what I've called glamour. We've had this long period of time when the market's super fixated on glamour and there are lots of other companies that are just slowly, quietly getting better. You can capture that improvement at the historical valuation. Gilead, that's basically what's happened with Gilead. The valuation continues to be reasonably reasonable compared with what their pipeline prospects are. There are a lot of parts of healthcare that have that.

AbbVie is another example. It's like a mid-teens earnings with a good enough pipeline that when the market is sort of very hyper focused over here there's a ton of stuff in the world that you can capture and just wait. You just have to wait it out. An example, a paradigm that I like is when there's a company with a few different businesses, so say it's two businesses and one business is dying, and that's the primary business, and the other business is sort of more nascent and it's got some growth in it and it's coming up. You're going to get this crossover point where the small, growing business becomes more of the dominant driver but the market has this historical view of the company as shrinking because of the primary business. The valuation still reflects the old view without what's coming. Those are amazing.

 I look for those all over where the market has yet to catch up to the valuation. You basically revalue it based on where the portfolio mix is going and you get years of alpha as a result so I look for that. Another example of what I'm looking for is a lot of businesses with order books so like defence businesses. Defence is a black box. We're sort of in a phase of human existence of being more conflict happy [indecipherable] more conflict seeking. Our long era of peace and prosperity might be coming to an end where there's more conflict. You've got the remilitarization of lots of different parts of the world. Defence as a business is really interesting because it's quite black boxy. You can't predict it. It's very lumpy and it's dependent on government. It's a bad business. You can do a lot with that. Really big order books out there, when you've got a company with a really big order book and they miss or they're not able to deliver on that, and you're in a marketplace that sort of shoots first and asks questions later, you can get this structural rearmament type growth for an emotional price when these black boxy businesses blow up. There are lots of types of situations that I'm looking for more and more. This is what I call idiosyncratic.

Glen Davidson: You're involved with a number of different portfolios, Global Dividend, Global Monthly Income, US Monthly Income, US Dividend Fund and Pool. Adam Kramer was here in that chair talking to me yesterday. Could you talk about Tactical High Income Fund, you're co-manager there on the equity side.

Ramona Persaud: Let's see, 2026, so about 10 years ago, just under 10 years ago, I was invited to join these multi-asset strategies with Adam and Ford O'Neil. It's been so much fun. It's brought so much more joy to the job, and it's made me a better investor. We sit down every so often but throughout the workday we're talking about investment opportunities across the entire capital structure. I'm a mosaic person so I like to think about everything before I make a decision. It's helped me to realize the blind spots in being just an equity investor where you're myopically focused on one thing without understanding that it's all interconnected.

In hearing how Ford who's like the guy in our fixed income business, one of the most senior managers that's retiring but will stay on with us, and hearing how he thinks about his asset class, and how Adam thinks about his, and everybody who works with Adam and all of the different asset classes has brought more, first of all, been very humbling as an equity-only investor, but then brought so much more perspective to how I approach equities, and especially from an income perspective where you can get income from all these different places. If you're an equity income only person and you think, oh, this stock with a 3% yield, or this utilities, I can go get a bunch of yield from utilities not understanding that it's so vulnerable to how much yield you can get everywhere else. It's just made me more intelligent.

Glen Davidson: I'm glad you're having fun. We all need to hear that these days. What would you like to leave the audience with as far as dividend investing, Ramona Persaud investing, weird investing, whatever it is you'd like to coin it. Please let the audience know your thoughts.

Ramona Persaud: I think there's a lot to be said for taking a very intentional, measured approach to markets that are like this. Markets where there is more uncertainty than there needs to be. Markets that invoke a lot of the range of emotions. There's a lot to be said for slow and steady, consistent and smooth over a long period of time. That's what I'm trying to accomplish for the investors in the strategies in which I'm involved over a longer period of time.

Glen Davidson: That's why you're a gold medal winner as well, which I know you're shy about so we won't get on into that. What should we keep a keen eye on as we are almost halfway through 2026?

Ramona Persaud: I'm looking for when the market gets so dissociated, which is a psychological term, when you reach the tipping point of trauma, which is what this is, right? You don't know, like, are we gonna be a nuclear war tomorrow? Are we gonna have a nuclear war tomorrow? We might, right? When you are sort of so traumatized one of the natural human responses is dissociation. You just shut off. The market has this quality as well because, again, it's made up of humans. What I'm really looking for is at what point the market just looks so dissociated that we could actually get back to fundamental investing. This is what's called climb the wall of worry but I actually think it's a psychological response to trauma, which is just I feel nothing. It's not good, it's not healthy but it can get you through.

Glen Davidson: Good to know.

Ramona Persaud: That's a bit of a dark note to end on. I didn't mean to be so dark.

Glen Davidson: Thank you for the dark note. Ramona Persaud, thank you so much for talking with us today. Very optimistic, very great overview and thank you for the time.