- High valuations in growth stocks and low bond yields have made value stocks more attractive as the next economic cycle gets underway, says Sandi Bragar, managing director at $12 billion wealth manager Aspiriant.
- Bragar shared where she’s putting her clients’ money over the next seven to 10 years, including three of her favorite stock picks.
- Visit Business Insider’s homepage for more stories.
Growth stocks have stolen the show in the market over the last handful of years. That has only become more true this year, as mega-cap tech companies have surged to eye-popping valuations amid the stay-at-home environment.
But according to Sandi Bragar — managing director at $12 billion wealth manager Aspiriant — growth stocks may have had their day, at least in her portfolio.
Bragar has begun shifting into value stocks for the next seven- to 10-year market cycle because she believes growth stocks have become too overvalued, she told Business Insider by phone on Monday.
“We’re really tilting toward value, and we’re doing that because the stock market is really overvalued and it’s really been led by the six super stocks, the FAANG+Microsoft,” she said. “And so the tilt toward value is our attempt to buy low in this market.”
Even further, she said the zero-interest-rate environment that has led to low bond yields has left little to choose from and has also spurred her shift into value.
“In August and September we started moving out of fixed income and into value stocks, both in the US and overseas,” Bragar said. “And those value stocks in some cases tend to have pretty nice dividends, so we’re getting some yields from the dividends to replace the yield that we used to get from fixed income but is just not there anymore.”
In such a low-yield, mega-cap world, Business Insider asked Bragar for more specifics on how she’s positioning her clients’ portfolios. She listed three of her favorite stocks, and broke down where else investors might consider putting their money.
Where Bragar is putting her money for the next 7-10 year cycle, including 3 of her favorite stocks
Bragar said she typically spreads her clients’ portfolios over four different areas: in fixed income, in liquid alternatives (i.e. exchange-traded funds), in defensive stocks, and — increasingly today — in value stocks.
“Those are definitely part of the value portfolios that we have — those are two stocks that feel very attractive from a valuation standpoint and should do well over time,” Bragar said of the two firms.
As for a defensive stock she’s bullish on, Bragar said PayPal (PYPL) — and explained why she defines it as defensive.
“They continue to own the digital payment market and there’s some interesting things as you look to the future as far as working with merchants to plug in crypto currencies,” she said. “And so we think their valuation is quite high today, but we think they’re going to grow into it.”
Bragar also said investors shouldn’t forget about international stocks, which will be helped by a weakening dollar. She said she’s currently looking toward Asia for the highest returns.
“From a regional standpoint we really like Southeast Asia, and you could even include China,” she said. “That region is particularly interesting, and it hasn’t been hit as hard as other parts of the world in terms of coronavirus.”
Investors looking for exposure to these areas might consider a products like the SPDR S&P Emerging Asia Pacific ETF (GMF).
Those seeking exposure to value stocks might consider a product like the Vanguard Value ETF (VTV).
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