Watch the full episode: Is it time to rotate back into U.S. equities? Sadiq Adatia, Chief Investment Officer at BMO Global Asset Management, oversees $75 billion in direct assets—and he’s making bold moves. Below are his three highest conviction sectors.
Pro Picks is brought to you by ATB Financial. With $62 billion in assets, ATB Financial is powering possibilities for more than 820,000 financial services clients in Alberta and beyond. ATB’s Capital Markets arm is a full-service investment dealer that offers investment and corporate banking, sales and trading, institutional research, and risk management. Visit www.ATB.com/inthemoney for more information.
1. Financials: Value and Momentum
Sadiq’s Stance: Bullish on U.S. and international financials, including emerging markets and European banks.
- Attractive Valuations: Financials offer reasonable multiples compared to tech, ideal for a lower-return market.
- Strong Yields: Robust dividend yields enhance total returns, appealing to income-focused investors.
- Economic Tailwinds: A healthy consumer and improving fundamentals will drive financials, especially in the U.S.
2. Technology: Long-Term Growth Leader
Sadiq’s Stance: Bullish, increasing exposure to broader tech, beyond just the Magnificent 7.
- Pricing Power: Tech giants like Apple can raise prices without losing demand, ensuring profitability.
- Staple Spending: Tech has become a non-discretionary necessity, supporting consistent revenue.
- Multi-Decade Trends: AI, cloud, and automation fuel tech’s growth for years to come.
3. Consumer Staples: Overvalued Safety
Sadiq’s Stance: Bearish, moving away from staples due to high valuations.
- Expensive Valuations: Staples like Costco trade at lofty multiples (e.g., 54x earnings), reducing appeal.
- Limited Momentum: Consumer spending doesn’t justify a staples tilt, with weaker performance expected.
- Tariff Risks: Staples aren’t immune to tariffs, as many source goods from China, adding cost pressures.
