Savita Subramanian, the head of U.S. equity and quantitative strategy at Bank of America (NYSE:BAC), shared her views on the market in an interview with Barron’s. Subramanian is worth listening to as her expectations never automatically follow the echo chamber narrative being screamed by financial news networks. Indeed, she’s responsible for attracting assets through consistent solid returns, while the news is responsible for attracting advertisers through consistent viewership. Her interests are instead directly aligned with investor interests.
Below, we explore the insights from the interview on various topics, including her bullish outlook, focus on value stocks, thoughts on the Fed, and investment strategies.
Why Investors Listen to Subramanian
Investors pay attention to Subramanian because she has a great record. A quick peek at her TipRanks Analyst Profile indicates the percentage of profitable recommendations made by the quant is 75%, and the average return per transaction is 38.90%. This is part of the reason why Savita Subramanian is a prominent figure in the financial industry, along with the reputation of Bank of America.
She earned a mathematics degree from the University of California, Berkeley, and an MBA with a focus in finance from Columbia University. Investors seek her opinions because of the broad knowledge and experience she brings to the field, as well as her ability to provide valuable and actionable insights.
Why Subramanian Remains Bullish
Subramanian expresses a bullish sentiment on the market, predicting that the S&P 500 (SPX) will end the year higher than its current level. She believes the market emphasis will shift from growth stocks to value stocks, with the latter outperforming the former under the current market conditions. This shift is likely to be driven by the potential for value stocks to generate higher returns in an environment where interest rates remain higher and inflation remains elevated.
Unpopular View of the Fed
She expects the Fed to maintain its current stance throughout the year, with the possibility of raising rates in the future if inflation continues to rise. She’s concerned that no one is talking about that as an option. However, she shared that she has the unpopular view with her clients that inflation has largely subsided, so Fed activity from here is less of a factor in the equities market.
Investment Strategies and Risks
Subramanian advises investors to consider a more balanced approach to their portfolios, suggesting a mix of growth and value stocks. She also highlights potential risks to the market, such as geopolitical tensions and remnants of the pandemic. By diversifying their portfolios and remaining vigilant, investors can navigate these risks and potentially benefit from the current market conditions.
“At the beginning of the year, it was much easier to be bullish because there were a lot more bears,” Subramanian said. She now feels the bears have capitulated to a rising market and that the potential for it to climb from here is far more limited.
Key Takeaway – Value Likely to Outperform Growth
Bank of America’s head of U.S. equity and quantitative strategy maintains a bullish outlook on the market. Her perspective highlights a significant shift towards value stocks, which she anticipates will surpass growth stocks in the current market conditions. In addition, Subramanian believes the Federal Reserve’s actions from now on should be less influential on market dynamics than participants fear. As a result, she advises a balanced portfolio strategy and vigilance against looming market risks.
