Chris Marx from AllianceBernstein shares insights with Wealth Professionals on why equities remain a top choice for long-term wealth
Wealth Professional, in partnership with NEI Investment, discusses insights from Chris Marx about the growth potential of equities and the current US equity market environment.
AllianceBernstein (AB) is a global investment management firm with US $769bn in assets under management as of June 30. AB serves as the subadvisor for the NEI US Equity RS Fund.
Marx emphasizes the growth potential of equities, stating, “If you want to access growth and innovation, equities are where you get that.”
He is particularly optimistic about long-term equity investments, describing them as the “greatest long-term wealth creator.”
The US equity market currently shows significant concentration, with a few large companies dominating performance. This concentration poses diversification challenges, prompting AB to focus on a quality, stability, and price (QSP) investment approach.
This strategy targets high-quality companies with stable business models and attractive prices, prioritizing those less sensitive to economic cycles, market fluctuations, and interest rates.
Marx acknowledges the challenging North American market environment due to this concentration, noting that such scenarios are not unprecedented. He compares the current situation to historical market concentrations, such as in the banking sector in 2008 and the technology sector in 2000.
AB evaluates each company on its own merits, looking for investment opportunities beyond high-profile stocks like Apple, NVIDIA, and Tesla.
Marx explains, “The market has started to show more discernment this year, with increased attention to individual company performance.” This discernment, he believes, is healthy for the market.
While attention often focuses on well-known companies, Marx highlights significant growth potential in lesser-known names and other sectors, including GLP-1 agonists for weight loss and back-office technology.
These companies, though not household names, are essential to the functioning of phones, credit card transactions, and internet infrastructure.
AB employs a 90/70 approach to balance market upside and downside, capturing 90 percent of the market's upside while limiting downside to 70 percent. This strategy, emerging from the 2008 financial crisis, aims to protect capital during downturns and enhance long-term performance.
Marx emphasizes the importance of selecting companies with fundamental stability, such as those in the healthcare sector.
Despite short-term uncertainties, Marx remains optimistic about the long-term prospects of the US equity market, underscoring the role of the market in capturing innovation and economic growth. “Staying invested, and not panicking, is the key,” he asserts.
