While some investors and financial advisors have fled the stock market, Voya U.S. Investment Management advises staying benchmarked in stocks.
“There has been a cloud of pessimism hanging over the market since the financial crisis in 2008,” said Paul Zemsky, chief investment officer of multi-asset strategies and solutions with Voya, formerly ING U.S., Inc. “This has led to excess caution, and as a result many have missed the rebound, been underinvested in stocks or sold too soon.”
Zemsky along with CEO Jeff Becker and Chief Investment Officer Christine Hurtsellers spoke during a press breakfast last week at Voya’s offices in New York City to discuss the firm’s investment plans for the rest of the year.
“From now to end of the year, we see moderate to good growth in the U.S. with low inflation,” Zemsky told Financial Advisor magazine. “It’s a classic mid-cycle type of environment with plenty of slack in the economy."
From a domestic investment perspective, Voya asset managers favor U.S. stocks over Europe and emerging markets.
“We invest across a broad range of countries within the emerging markets, but unfortunately earning estimates are still in a downward trend for many of these markets,” Zemsky said. “Among the larger countries, India and Russia have seen earnings expectations stabilize while earnings estimates in Brazil are still being revised lower.”
In addition to planning their end of the year investment strategy, Voya has been helping financial advisors adjust to the $213 billion asset management firms’ recent rebranding from ING U.S., Inc.
“It only affects advisors in that we have worked with them to update our systems and collateral, but it’s the same product and interaction with the same people,” said Voya CEO Jeff Becker. “Advisors who currently distribute our products and have linkages with us understand this.”
He noted that Voya follows a bottom-up strategy and is research driven. “This approach has proven itself through market cycles and is appropriate for pensions, retirement plans and their participants, as well as long term retail savers,” Becker told Financial Advisor.
“This helps our investors generate reliable, risk-adjusted returns over the long-term.”
One area of concern is China. “We worry about the private sector debt situation in China and whether it will burst or deflate too quickly and how much the government will have to get involved,” Zemsky said. “If the balloon bursts or deflates too quickly that could impact GDP growth globally, which would be a negative for the US market.”
For now, Voya asset managers have no plan to reposition their portfolios. “If the situation in China deteriorated, we would most likely sell some equity and invest the proceeds in bonds,” Zemsky explained. “We would look to sell markets that are most closely linked to China’s growth, such as Japan and Australia.”