The dominance of the ‘Magnificent 7' has shaped US equity markets for years, but strong returns don't have to come from just a handful of stocks. While these companies have delivered substantial performance, their influence has also created concentration risk for investors.
Taymour Tamaddon, portfolio manager at T. Rowe Price, takes a different approach. "We aim to generate alpha from across the wider market rather than be too reliant on a handful of high-profile companies," he says. His US Large-Cap Growth Strategy seeks opportunities beyond mega-cap tech, with notable positions in healthcare and industrials. "We invest in companies rather than sectors, identifying idiosyncratic opportunities," he explains, pointing to firms like Intuitive Surgical and Stryker in robotic surgery, as well as Howmet Aerospace, a leader in next-generation jet engine components.
While the MAG7 remain key market drivers, Tamaddon emphasises the importance of balance – by broadening their perspective and targeting opportunities across the market, investors can navigate uncertainties while positioning for sustainable long-term returns. "Maintaining diversification from a portfolio construction perspective is crucial," he says.
Explore how a broader investment approach can unlock long-term growth. Read the full article here.
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