The market is booming and investors may be wondering what to buy right now. Some experts believe the S&P 500 index reached an all-time high in March, even though stocks were already soaring. Although the US Federal Reserve (Fed) has indicated that it will maintain its plan to cut interest rates three times this year, there is a view that it will not cut interest rates, which could further heighten uncertainty. What’s more, there are calls for investors to exit cash if interest rates fall. If he had $1 million to invest now, what should he buy? CNBC Pro asked fund managers and wealth advisors how they would allocate that money in their portfolios. 60/40 Portfolio A 60/40 portfolio is a good starting point for many investors. In fact, Aaron Benson, portfolio manager at investment bank Baird, says he uses this strategy in many of his clients’ portfolios. This way, he would allocate about 60% to stocks, with 15% each in large-cap U.S. growth stocks and large-cap U.S. value stocks. Small-cap stocks account for 4%. and 8% to mid-cap stocks. Additionally he will allocate 15% to international developed market stocks and emerging market stocks. “We are big believers in style diversification and feel it continues to be prudent to continue to diversify with value and growth stocks,” Benson said. He stressed that the small-cap market is “inefficient” so it is more important to be proactive in stock selection and identify the best opportunities. “Small-cap stocks, based on price-to-earnings ratios, are the cheapest they’ve been since the real tech bubble compared to large-cap stocks,” he said. “We see it as a long-term opportunity.” He said that with $1 million to invest, it “makes sense” for an investor to put money into both small- and mid-cap stocks now. He said it would be. Benson added that global stocks currently look “very cheap” compared to their U.S. peers. “So we’re very comfortable including that as part of our new investment capital allocation.” When it comes to bonds, Benson allocates about 40% as follows: Allocate 10% to short-term taxable bonds and 10% to short-term taxable bonds. He is 25% for medium-term bonds. 3% for high-yield bonds. The final 5% will be allocated to real assets, which are “good diversifiers” of stocks and bonds, he said, including real estate, infrastructure and commodities. Baird has more than $405 billion in assets under management, including more than $275 billion in personal assets under management, with an average client account size of approximately $1.2 million, and is a senior portfolio manager at Commonwealth Financial Network. Chris Fasciano also believes that the 60/40 portfolio is “an asset allocation that once again has value.” He allocates 60% to stocks, focuses on large-cap U.S. growth stocks, value stocks, small- and mid-cap stocks, and international stocks, and prefers intermediate-term bonds. If you’re an investor interested in focusing on technology and artificial intelligence, take a look at Shams Afzal’s allocation, a managing director at Carnegie Investment Advisors. The majority of his model portfolio consists of allocations to technology and growth stocks. Industries such as AI and semiconductor power plays. “When AI became mainstream in 2023, there was an overabundance of capital investment in cloud computing power and data center storage. In other industries, multi-year growth is almost a foregone conclusion,” Afzal said. “This is evidenced by Nvidia’s recent earnings, which showed 400% year-over-year growth in its data center business alone,” he said. As a result, he said, there is an “urgent need to modernize and future-proof the grid” for power demand from hyperscale computing. Afzal cited Watsuco as one stock that addresses AI’s power needs. Overall, these are his allocations, and he cited exchange-traded funds as a way to invest in such trends and more. This portfolio covers his period of about one year. When it comes to international stocks, Afzal likes Mexico, a direct beneficiary of China’s decline in foreign direct investment. He added that there are three reasons why he is bullish on India. India “remains the go-to source” for high-tech labor. Digital transformation is occurring across industries. And we are beginning to see “healthy” demand from a “significant” middle class. ‘Moderately Aggressive’ Louis Navellier will invest 100% in stocks Louis Navellier, chairman and founder of Navellier & Associates, will invest 100% in stocks. He has a portfolio for “somewhat aggressive” investors, but says much of the risk comes from small-cap stocks. Overall, he said, “The U.S. is now kind of an oasis because China clearly appears to be in serious trouble.” Navellier said buying bonds may be a good idea now that yields are falling, but that U.S. investors are taxed more on bonds than on stocks. “I’d rather see a 20% tax rate on long-term capital gains, followed by a 37% bond interest tax,” he added. Here’s a breakdown of the top 15 stocks in his portfolio. He is currently very bullish on Nvidia and Super Micro Computer, saying their revenues are “growing rapidly” and that Nvidia still dominates the chip space. Here’s why he’s positive about his Nvidia and his Super Micro Computer. Mr. Navellier’s portfolio also includes global stocks such as Chinese electric car maker Li Automobile, Mexico’s Vista Energy, German automaker Volkswagen and Canadian gold producer Alamos Gold. The average investment amount of his clients is $1.3 million, and his firm manages more than $1.2 billion.
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