Amidst the uncertain economic landscape, investors are reassessing their criteria for identifying lucrative large-cap investment opportunities.
Sarah Rich, vice president and lead portfolio manager at Goldman Sachs, shared her insights during VettaFi’s Equity Symposium on March 13, emphasizing the attractiveness of U.S. equities for several reasons.
Rich highlighted the U.S.’s significant share of global GDP, its leading labor productivity, and the consistent and diverse corporate earnings growth as key factors.
Rich pointed out that despite economic challenges like the global financial crisis, U.S. equities have demonstrated robust growth over time. However, when evaluating large-cap U.S. investments, Rich cautioned against relying solely on market-cap-weighted benchmarks.
These benchmarks can be backward-looking, potentially overvaluing certain stocks and undervaluing others, leading to underperformance and deviation from benchmarks.
Allen Bond, managing director and head of research at Jensen Investment Management, echoed Rich’s sentiments, emphasizing the risks faced by investors who avoid large-cap U.S. investments.
Bond emphasized the importance of focusing on high-quality businesses for successful investments, aiming to identify companies poised for sustainable business value creation.
Rich advocated for a smart beta approach in the U.S. large-cap space, leveraging over 40 years of research on factor performance to make strategic, data-driven investment decisions.
