Nuveen's Saira Malik on balancing expensive and cheaper markets, and the importance of mentors

Conventional wisdom is not to turn a hobby into a job for fear of creating a chore out of something that should bring joy; but Saira Malik clearly continues to find plenty to love and enjoy in the stock markets, turning her stock-picking hobby into a high-profile career.

“I’ve loved the market since I was a teenager,” Malik, head of the Nuveen equities and fixed income platform and CIO at the $1.2 trillion firm, said in an exclusive interview with Pensions & Investments.

Right now, the U.S.’s dominance in markets, particularly driven by growth stocks and advances in technology, is “certainly nothing that I would bet against…I think you need to keep your balance in the lead that the U.S. has gained now in terms of technology, and what it can do in terms of productivity and helping companies grow revenues is going to continue,” San Francisco-based Malik said.

She also agrees, though, with the view that the U.S. is expensive. “I agree — the U.S. is not a cheap market,” but that’s not enough of a catalyst to get out, she said. “I don’t see the catalyst for the U.S., at this point, to underperform.”

While the U.S. is not “at the cliff of a recession,” there could eventually be a mild one, maybe in 2025 since recessions on average start six months after a rate cut, she said. This month, the Fed made its first rate cut in four years, kicking off the U.S. easing cycle with a 50-basis-point reduction in the fed funds rate to between 4.75% and 5%.

“Maybe where we differ there (from market consensus) is that, given the strength of the economy, I think the Fed (has) front-loaded rate cuts and we’ll ultimately see a 75-100-basis-points cut over the year,” Malik said.

Given her view on the U.S., she likes “to balance this with other areas of the world that I think are cheap, but also have a catalyst.”

And for Malik, that opportunity is in emerging markets. Brazil and Indonesia are bright spots, while India — “even though it’s trading at a premium — I think it has some aspects and structural aspects that make it a better position than China at this point.”

She cited emerging markets' earnings growth for next year around the mid-teens, cheap valuations, promising GDP growth in Indonesia and Brazil in particular, and inflation not being “out of hand” as reasons for her view.

She’s also bullish on Japan.

“I think portfolio managers could start to allocate more to emerging markets, also…Japan,” Malik said.

The firm’s ask for Japanese companies that are more domestically oriented — such as Japanese banks and manufacturing companies without many overseas projects — is to return cash to shareholders and pay dividends.

Geopolitics, tax cuts

Politics and geopolitics remain on her radar, noting that in election years U.S. markets tend to be up about 11% — while “volatility also tends to be up by about 10%. We’ve not seen tremendous volatility this year — I think it could pick up from here,” she said.

Whether Vice President Kamala Harris or former President Donald Trump wins in November, Malik will be watching what happens when tax cuts expire next year.

“If it’s more tilted to Republican, I think…the ($)4.6 trillion that it takes to reimplement those tax cuts likely comes back into place. If it’s more of a Democratic control across the board, I think some version of them comes back into place,” she said.

That will benefit either high-income or middle-to-lower-income citizens, but the re-initiation of those tax cuts “could be somewhat inflationary for the economy.”

Fiscal debt in the U.S. “will increasingly become an issue,” and something that needs to be thought about over time. U.S. federal debt currently stands at around $35 trillion.

And then, the way the U.S. acts on climate and energy will differ by candidate.

“Those are things I’m thinking about in terms of not just the election…but what are the implications beyond the election?” Malik said.

Beyond the U.S., the war in Ukraine and conflicts in the Middle East, could have “a huge impact on energy prices.” Oil prices spiking and remaining above $100 per barrel for a long period of time have in the past led to a global recession, she said. “I think that is also still hanging out there.”

Investing in the stock market was a hobby of Malik’s mother, a medical doctor who sparked Malik’s excitement in markets even more when she arranged for her to spend part of a summer in New Mexico with famed stockpicker Al Frank. And then, “when I was 19, I decided I wanted to be like Al.”

Malik started publishing her own markets newsletter in college, a free paper that she sent out, asking readers if they liked any of her stock picks, and whether they’d use her as their stock broker. She used her hobby to pay part of her way through school.

Once she’d graduated, she “knew (she) wanted to work on Wall Street,” but found upon applying to various companies — 20, she said — that she was rejected for not going to the right school.

So she “doubled down,” gaining her masters in finance and joining a program at the University of Wisconsin, Madison, “where 14 of the students could manage part of the university’s endowment.”

A little over one year later, she had four job offers — “things quickly changed” — and she moved to New York to take up a role as an equity research analyst covering materials at J.P. Morgan Asset Management. And she “loved it."

From there, she became a small-cap analyst at the now-$3.3 trillion money manager before joining Nuveen as an equity research analyst.

She was made head of equity research and global portfolio manager in 2007, head of global equity portfolio management in 2014, CIO for equities in 2017 overseeing $500 billion in assets, and then CIO for the entire $1.2 trillion firm and head of equity in 2022.

Then, in July, she added the title of head of Nuveen equities and fixed income to her roster, succeeding William Huffman who was named CEO.

“I grew up doing many of the roles that I manage,” Malik said.

And while her ascension to the executive committee and senior leadership team is due to her hard work, Malik is also open about the role that mentors and sponsors have played in her life over the years — and that’s something she’s also paying forward. Testament to that was her being named one of P&I's inaugural class of Influential Women in Institutional Investment last year.

Among her mentors and sponsors are Keith Banks at then-J.P. Morgan Investment Management, who hired her into her research role; Susan Ulick, her mentor at JPMAM whom she followed to Nuveen; and Huffman and previous CEO at Nuveen, Jose Minaya (now global head of investment management at BNY).

They’ve not only been great “guides for me, lighting a path for me, but I also think…their sponsorship’s been important. The key thing I often talk about with sponsorship is a great sponsor is someone who talks about you when you aren’t in the room, and highlights your talents. And all of those people, plus more, have done that for me over the years — and that’s why I’ve been very happy in this industry. I’m still…a stock picker (at) heart. But one great thing about Nuveen is learning about all these other asset classes, because to have such diversification and lack of correlation between asset classes for our clients is very important,” she said.

Malik oversees equities, global fixed income, municipal bonds, multiasset strategies, private placements, public real assets and other strategies, while also working on weekly market and investment insights, leading the global investment committee, and providing client asset allocation views from across the firm’s investment teams.

That last responsibility is something she takes particularly seriously.

“I’m still involved in…the day-to-day ‘how are we thinking of investments?’ I think it’s important to do that, even as a manager, so that I stay engaged with…what the team is working on.”

Malik shares knowledge with clients and a wider audience, partly through a big presence on social media platform LinkedIn, as well as through official channels.

“Not only do they (clients) demand that…strong performance, they want to hear what everyone here is thinking. And often, when I’m sharing what I’m saying, it’s really coming from the investment teams. So if I’m talking about munis, what I’m trying to give clients is a view into what Dan Close is really thinking — not what I’m thinking,” she said, referring to Daniel J. Close, head of municipals at Nuveen.

She’s also excited about the firm's strong presence in the U.S. and its expansion to the rest of the world. “Continuing to grow our global presence is important. Meeting (clients) where they are is very important to me.” Nuveen’s AUM split is about 35% fixed income AUM, 31% equities, 12% real estate, 10% multiasset, 9% private capital, and the remainder in real assets.