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Walter Scott briefed Norwalk trustees on underperformance, cites sector positioning and market rotations
Summary
Investment team Walter Scott told Norwalk’s pension trustees the international equity mandate returned about 8% annualized since the plan’s inception but trailed growth benchmarks through January 2025; managers attributed lag to underweight financials, sector rotations in 2022 and a weak fourth quarter in 2024.
Walter Scott, the investment manager for part of Norwalk’s international equity allocation, updated the Norwalk City Pension Board on portfolio performance and positioning, saying the strategy has produced an annualized return near 8% since the city’s investment but has trailed the MSCI growth benchmark through January 2025.
Laura McDonald, a Walter Scott client investment manager, and Alan, the firm’s investment manager for the mandate, told trustees the account’s absolute returns have been reasonable but that sector positioning — especially an intentional underweight to financials — and market rotations that favored value stocks at times have driven relative short‑term underperformance. McDonald and Alan described the process the firm uses to pick roughly 50 long‑term holdings and stressed a team‑based, bottom‑up stock‑picking…
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