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American Century Investments Senior Portfolio Manager Rich Weiss on investment strategies for this market.
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500 right now are in the market rally continues the S&P again flirting with that closing record high the Dow writing -- -- day winning streak.
Long distance IPSec and just say an episode we've not been playing in the market.
Don't worry our next -- says the rally is played out.
Time to move on to even riskier.
Assets and yes he's gonna say -- -- -- American Century Investments senior portfolio manager joins me now from Los Angeles -- share some.
Fundamentals not up.
Playoff this rally you know it's it's interesting you're saying that it is a risk on environment and that those they're not participating need to participate -- really go after high.
Risk assets would be recommending they get.
Well -- Arguably the easy money's been made the first stage of this recovery the first stage of what is a bull market which feels good after so many years.
But you have to move to the next phase -- -- And and by that I mean.
Those sectors of the market the types of stocks in companies that have not fully and fairly participated in this rally.
As they logically should -- four indeed -- -- -- -- classic economic recovery so small cap stocks.
A move to a mid cycle stocks the more pro cyclical companies technology industrials.
And debt energy commodity stocks will logically all prosper in the coming phase is if this rally continues.
Let's talk about the performance.
The American century global allocation -- that Mena and global we are gonna get -- a global because there really is right -- -- your breakdown here but the one you return almost 7% your benchmark -- -- more than 11%.
But you're willing to take that extra bad that extra slice -- assuming on more international markets this year.
-- -- -- markets certainly will will benefit the in this particular recovery the US is the lead car of the train if you will.
But our our our trading partners have developed markets will benefit next.
And so we are globally waited and very diversify that portfolio as we are in commodity space is well for number of reasons senate including.
The potential for inevitably inflation come around.
And you're also looking at other -- -- thanks guys I mean this is kind of a better asset allocation break don't what I find interesting is.
Your bond positions here I mean is this corporate bond positions that you've got in that group right there I'm assuming they're not going after US treasuries three cents.
Yet what we they are diversified bond fund and domestically has some treasuries but we've been overweighted in.
Credits and high yield bonds for some time now and as we all know that's.
That's been the place to be any risky asset expressing -- space what we're not taking excessive duration -- maturity.
Risk at this point so.
For obvious reasons and our our average duration is somewhere around four years.
I want to show our viewers of the -- bring up a hot part of the S&P right now because we're about two points away for a record close -- wanna continue the conversation.
But give our viewers -- sense that we really are getting close to a new record high for the S&P this could be a big day we got ten minutes ago.
Right now I don't ask you.
Also about sectors that you're avoiding I know that -- -- you -- US treasury what are your bigger holdings right now is real I say I'm thinking that 2012 what have been your signal to buy more into real -- you're still -- bank on that sector.
This year is this US based real estate or is this international realistic.
It's globally -- we implement through American century's global real estate fund run by Steve brown and it's been a real winner for -- as an asset class.
As you can imagine over the last year -- so.
And Steve really hit the ball out of the park with that funds so it's been a double whammy for us but we continue to -- but because that's -- done so well and arguably we're moving to the mid cycle stocks we -- reducing the overweight in reits but it's been very helpful and continues to be from a data perspective.
And also again from a potential inflation hedging prospective.
-- you're reducing and rates are you as a specific -- they are looking out or out any names but as specifically is that.
Office properties as it is -- hospital department where where -- kind of sink some some signs of with.
-- brought broadly diversified and -- -- date they've done so well in price terms though.
That the valuation metrics -- are no longer as compelling as they once were but it's very broadly diversified across all the major sectors again.
Across all major geographies as -- -- is kinda general a pullback.
If you want to talk about your politics because -- have been saying -- the last couple sessions is the dollar -- -- got the strengthening of the dollar this could open up a whole new host of problems three US multinationals maybe not your problem.
Considering -- allocations are.
But this could this could up -- up some problems for you a potentially overseas how do you.
How do you play the dollar verses the yen the dollar vs the Euro the sterling what does this mean for -- What we have an active foreign exchange component in our global allocation fund but.
Well what it means for US corporations obviously it's it's gonna hurt their exports.
And -- that you heard earlier in the show.
It's not it's a typical for a stock market like the US and its currency to move in the same direction at the same time.
We don't expect that correlation to remain that way.
At logically.
We we expect to see foreign currencies take over from the dollar as.
The recovery expands internationally.
It in the near term though because of our heavy weight right outside of the US relative to domestic equities and bonds -- I think we're well positioned for that.
Rich wise written very -- allocation as a politician got going on their American Century Investments senior portfolio manager -- thank you.
Very much seven.
