Anwiti Bahuguna took over as executive vice president and chief investment officer of global asset allocation, a newly created role, at the $1.2 trillion Northern Trust Asset Management, last September and has since witnessed a stock market rebound.
“Some of my clients — including pension funds — are very concerned about high equity valuation and market concentration in a handful of powerful tech stocks,” she said. “But research shows that the equity markets are broadening as many other names across many sectors — including energy, health care, financials — have since joined the rally.”
Bahuguna pointed out that this year as of May 29, the S&P 500 index has gained 11.24% — but 149 stocks in the index (from a broad array of industries) have actually outperformed the index. Moreover, stocks in Europe, U.K. and Japan have also participated in the rally, thereby offering even more appealing issues to invest in.
“Stocks are performing well because of strong fundamentals, namely solid earnings, and I expect this to continue this year,” she said.
Hence, Bahuguna, who is one of four CIOs who report to Angelo Manioudakis, NTAM’s global chief investment officer, is bullish on equities and thinks there are many attractive companies for investors.
Clients are also concerned about high inflation, she noted. While Bahuguna concedes that inflation has not declined as fast as she had expected, the ongoing trend is indeed downward, which should bode well for the U.S. economy. As a result of the sticky prevalence of inflation, however, she is currently underweight in investment-grade bonds.
Another worry for her institutional clients is geopolitics, including the ongoing war in Ukraine, the war in Gaza and worsening conflict between China and Taiwan.
“Normally, U.S. markets tend to be insulated from these kinds of geopolitical events, but I am concerned by the fact that there are several of these geopolitical worries occurring concurrently,” she said.
With respect to ESG matters, she said her European clients are “deeply committed” to reducing greenhouse gas emissions, while in the U.S., attitudes towards ESG present a “mixed bag.”
“Endowments in the U.S. remain very focused on ESG and sustainable investing, “she said, while other institutional investors, such as corporate pension funds, are more cautious about the sector.
After more than three decades working in Boston, spending the past 25 years at Columbia Threadneedle Investments and its predecessors, where she served as senior portfolio manager, head of multiasset strategy, Bahuguna was recruited by NTAM and relocated to Chicago.
