Greg Miliotes is a portfolio manager on the Capital Group U.S. Equity Fund. He began his Capital Group career as an analyst who variously covered U.S. diversified industrials, heavy machinery, waste companies, U.S. small-cap health care and large-cap medical technology. Greg is also a member of the Capital Group management committee, which sets the company’s strategic direction. We asked Greg about his approach to investing, his thoughts on the economy and his attachment to Capital Group Private Client Services.

What’s your core approach to investing?

My investment mindset is growth at a reasonable price. When I think of “reasonable,” I focus on valuations that could be compelling on a long-term growth trajectory. As I build my portfolios, I lean into two core advantages of The Capital System. First is the deep, fundamental research of our analysts, who know the companies, their managements and their businesses exceptionally well. It’s a key source of investment ideas. Second is making long-term investments for our clients. I have often held a security for five, seven or 10 years to allow it to reach its potential, assuming the investment thesis continued to unfold.

There are so many companies to choose from. How do you sift through your options?

Our research analysts and their insights are foundational to my investment portfolio. In fact, I believe analyst conviction is essential to any investment idea. After analyst conviction, I have a three-step process that focuses on, in order, market, company and valuation.

When I think about the long-term growth opportunity of an investment, I focus on both the potential magnitude and duration of the growth rate. One of the key components of that growth is market opportunity, so I first consider how fast the company’s markets grow. The phrase from President John F. Kennedy has always resonated with me: “a rising tide lifts all boats.” Second, I focus on the company in that market — its competitive differentiation, market position and strategic vision. Finally, only then do I look at valuation to understand if our clients can get a reasonable return for the asking price.

I aspire to create a core portfolio for our clients, though I admittedly lean toward the growthier side. I am very mindful of my exposure — that is, not only what I own, but also how various forces could influence what I own. I always want to make sure I can express a differentiated view that reflects my convictions.

Speaking of the market, the dominant theme of late has been artificial intelligence. What are your thoughts on AI?

I believe AI is one of the more compelling opportunities in the market, but it is complicated by uncertainty as to how and when it will affect many businesses. Despite the excitement about its prospects across many markets, we still have a long way to go before we realize the business impacts of AI — including the long-term “winners” and “losers.” As an example: AI chatbots and virtual assistants. Many of us have experimented with them, and they are incredibly useful for some tasks, but they have not displaced many technology platforms. There are strong business cases for AI, but we will need time to understand where it can be integrated to create economic value.

In the near-term, I am focused on exposing my portfolio to tangible AI beneficiaries, such as hardware, energy consumption or potentially the consulting services that will implement the technology. In the long-term, I continue to look for opportunities where there could be substantial business impact; however, many company valuations do not reflect that opportunity.

For instance, one area of excitement — highlighted by our research analysts — is the long-term implications of AI in health care. The technology could offer an incredible opportunity to accelerate the drug discovery process. Hence, I am interested in biotechnology and pharmaceutical companies that can leverage it to bring incredible treatments to market sooner.

Do you see other areas of opportunity?

I think the small-cap landscape is incredibly attractive, and I am always looking for new investment ideas that could compound into the next large-cap companies. Small-cap is an area where there is so much innovation, passion and opportunity with driven management teams. And I believe this asset category has many hidden gems.

To use an analogy, small-cap investing is like searching a beach with thousands of pebbles and turning over each one to find something unique, something that no one else has noticed before. Large-cap investing is like a beach with a few large boulders that are visible to all. To find a compelling investment, you must envision something different than everyone else, even though you all see the same thing.

With that said, there are investment opportunities in larger companies. Specifically, I believe some of the mega-cap technology companies are expanding their competitive moat through capital expenditures and the development of proprietary technologies. I believe these may lead to flywheel effects and compelling investments over multi-year time frames.

What drew you to Capital Group Private Client Services?

It is a privilege to work at Capital and to work on behalf of our Capital Group Private Client Services clients. Importantly, I am also a client. That ownership and accountability is important as a portfolio manager; I am personally investing alongside our clients and believe in the mission to protect and prudently grow capital. Additionally, aligned with that approach, I believe in long-term investing with portfolios that have relatively low turnover. Short-term orientations can shake investors out of their holdings due to market volatility; however, those are the very markets that offer the best opportunities to add to holdings where we have strong conviction. Hence, I aspire to lean into market weakness.

Similarly, we take that same long-term view with how we serve our clients. We are always looking to evolve with our clients by offering new services and strategies that go beyond Capital Group’s traditional mutual funds, separate account offerings and ETFs. We want to be impactful for as many clients as possible and be proactive in that pursuit.