The Power of Compounding – The Duration Effect

Semiconductor equipment manufacturer ASML, paint and coating company Sherwin-Williams, and payments company Mastercard are examples of stocks which possess the ‘duration effect’, or the ability to compound their free cash flows over time, according to Eileen Riley, CFA, Co-Portfolio Manager of the Loomis Sayles Global Equity Fund. The following are key take-outs from my recent interview with Eileen about the duration effect and its role in the global equities portfolio she co-manages with Lee Rosenbaum.