Domestic equities are a good investment, a money manager told attendees at the Greenwood Village, Colo.-based Investment Management Consultants Association’s conference yesterday in Denver.
“I overweight U.S. domestic equity,” Robert Doll, vice chairman and global chief investment officer for equity at BlackRock Inc., said during a discussion on portfolio construction.
“Domestic equity has the highest predictability of earnings, and the lowest volatility. No other country comes close to the U.S. in terms of aggressiveness in monetary policy.”
Mr. Doll also manages the New York-based firm’s large-cap funds.
“I would underweight Europe,” he said.
For specific sectors, Mr. Doll said, he will continue to underweight financials.
“I would include more insurance and less banks,” he said. “I would include names like Chubb [Corp.], Allstate [Insurance Corp.] or [The] Travelers [Cos. Inc.].”
U.S. multinational companies are also of interest.
“They are still an important theme because of their growth, quality and cheapness,” Mr. Doll said.
“They are growing their earnings in double digits. I would include names like Hewlett-Packard [Co.], Johnson & Johnson and McDonald’s [Corp.].”
Mr. Doll has also retained an overweight position in energy.
Reacting to the federal government’s tentative agreement on a bailout for the financial markets, he said: “This bill doesn’t solve all of our problems. It doesn’t recapitalize the system.”
“If we have a recession, I think it will be mild,” Mr. Doll said. “I think we will see consolidation in the financial services sector; tons more to come. Some will disappear by going belly up, and others will merge.”
More regulations are coming, Mr. Doll said.
“I believe the mutual fund industry is one of the most regulated vehicles on planet Earth, and the hedge fund is the least,” he said. “We’re probably looking at something in between.”
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