Anne-Marie Peterson, Arun Swaminathan and David Polak

October 14, 2024

Recent months have seen early signs of a market rotation, from a narrow set of growth leaders to a broader array of companies. While investors are not bailing on Big Tech, many are concerned about concentration risk and excessive exposure to these companies in market-cap-weighted indices.

While exposure to those technology giants that have driven equity markets in recent years remains justified, there is a strong case to look at a broader set of companies and industries that have potential for a long runway for growth ahead.

Among these growth themes for the coming years are industrials with high barriers to entry, healthcare stocks exposed to the genetic revolution, and industry leaders with few competitors and strong demand.

Such themes are clear, and it is a matter of valuations; others become more transparent over time. But having a broad set of themes, expressed through a range of companies, helps our pursuit of active returns while seeking to mitigate risk in our portfolios.

Profit growth outside Magnificent 7 has perked up

Past results are not a guarantee of future results.

Source. Bloomberg. Data as of 13 August 2024

Anne-Marie Peterson is an equity portfolio manager with 29 years of investment industry experience (as of 12/31/2023). She holds a bachelor’s degree in economics from the University of California, Irvine. She also holds the Chartered Financial Analyst® designation.

Arun Swaminathan is an equity portfolio manager with 12 years of investment industry experience (as of 12/31/2023). He holds an MBA from Harvard Business School and a bachelor’s degree in technology from the Indian Institute of Technology, Madras, India.

David Polak is an investment director with 41 years of investment industry experience (as of 12/31/2024). He holds a bachelor’s degree in economics from University College London graduating with honors.