Need to Know: This fund has increased its dividend for 56 straight years. Now it’s snapping up GE.

Alliance Trust’s net asset value total return fell 7.1% in 2022, edging past its MSCI All Country World Index benchmark, which lost 8.1% in a year where the S&P 500
SPX,
+0.14%
fell 19% against a war and inflationary backdrop, and commodities outperformed.

Chairman Gregor Stewart said a “balanced exposure to countries, sectors, and styles,” and returns that leaned on stockpicking helped it lessen the pain of 2022. In our call of the day, we take a look at some stock picks the fund is counting on to steer through 2023.

Stewart says they want companies that can “survive, and even thrive, in the current high inflation environment, as well as many companies who are financially strong enough to weather a recession.”

In the fund’s annual report on Thursday, Stewart predicted a rally for global stocks if inflation has indeed peaked in the U.K. and U.S. and the Ukraine war ends, but says the threat of a “deep recession” keeps the argument open for bears and bulls.

The good news? “The speculative froth topping the valuations of many growth stocks has been blown away by higher interest rates and harsher economic conditions. We now look forward to the possibility of company fundamentals, not sentiment, driving share prices, if not for the short term, certainly in the long run,” said Stewart.

One of the fund’s stockpickers is GQG Partners, whose Global Quality Equity Fund
GQRIX,
+0.07%
has a top five-star rating on Morningstar. GQG timed an exit out of overpriced tech names in 2021, and put the money into cheaper energy companies, said the chairman.

Brazil’s Petrobras
PETR4,
+1.27%

PBR,
+2.73%
and Exxon Mobil
XOM,
-1.46%
were top performers for Alliance Trust in 2022, while a lack of exposure to Tesla
TSLA,
-3.04%
meant it avoided the slump in the EV maker last year. Note, in its January fact sheet, Alliance Trust said lack of exposure to Tesla
TSLA,
-3.04%,
Nvidia
NVDA,
+3.83%
and Apple
AAPL,
+0.84%
this year means they missed out on those rebounds.

Among stocks added to the portfolio, Vulcan Value Partners picked up commercial real estate group CBRE
CBRE,
+0.41%
and industrial giant GE
GE,
+0.68%,
whose management it believes “has made considerable progress in simplifying the company’s structures and de-risking the balance sheet.”

Canada-based valued-themed investment manager Black Creek added Stericycle
SRCL,
+0.22%,
a global leader in regulated waste disposal services to businesses. The company’s valuation “is temporarily depressed as it goes through a multiyear restructuring program which will leave it stronger in the long run,” said the manager.

Stewart said high-quality cyclicals with “temporarily depressed valuations” could see an outsize benefit from an economy bounce. “This reflects the fact that our approach does not attempt any big calls on the future direction of the market. We believe there are potential mispricing opportunities across the market, whether it is among growth stocks that have been oversold or value stocks whose earnings prospects are underappreciated,” he said.

In the January fact sheet, Alphabet
GOOGL,
+0.42%,
Microsoft
MSFT,
-0.18%,
Visa
V,
-0.44%,
Amazon
AMZN,
+0.40%
and Exxon Mobil were the top five holdings for the fund, but “notable” contributors to the month’s performance in the top 20 were MercadoLibre
MELI,
-0.98%
—known as Latin America’s Amazon — Visa
V,
-0.44%
and wireless networking group Skyworks
SWKS,
+2.39%.

Read: This cash-cow stock strategy is attracting lots of money. Here are its top 10 picks.

The markets

Stock futures
YM00,
-0.13%

ES00,
-0.34%
are lower, led by tech
NQ00,
-0.61%,
as the two-year yield hovers around 5% and the 10-year
TMUBMUSD10Y,
4.012%
at almost 4%, and the dollar pulls back. Oil prices are weaker, Europe stocks
SXXP,
-0.54%
are in the red and Asia
HSI,
-0.63%
closed mostly lower.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Weekly jobless claims are due at 8:30 a.m., and ahead of that, outplacement firm Challenger, Gray & Christmas said year-to-date job cuts are the highest since 2009. Fed Vice Chair for Supervision Michael Barr will speak at 10 a.m.

After the close, Oracle
ORCL,
+0.15%,
Gap
GPS,
-1.24%
and DocuSign
DOCU,
+1.14%
will report results.

Silvergate Capital shares
SI,
-5.76%
are down 52% in premarket trade and falling fast after the lender said it would wind down operations and liquidate its crypto-friendly lender and subsidiary Silvergate Bank. That has ricocheted across to Signature Bank
SBNY,
-1.47%
stock is down 11% even though the lender has already said it’s whittling down its digital asset deposits.

Troubled Swiss bank Credit Suisse
CS,
+0.35%
says it will delay publication of its 2022 report after the Securities and Exchange Commission questioned its 2019 and 2020 cash-flow statements.

California has dropped a $54 million contract with Walgreens Boots Alliance
WBA,
+1.00%
over the pharmacy chain’s abortion-pill ban in some states.

Sen. Republican leader Mitch McConnell is in thehospital after a fall.

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The chart

The tickers

These were the top-searched tickers on MarketWatch as of 6 a.m. Eastern:

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