Investing outlook, 3 trends to watch from a Wells Fargo equities chief – Business Insider

  • Ann Miletti is the head of active equity at Wells Fargo’s $607 billion asset management arm.
  • Miletti started out working the midnight-to-eight shift at Strong Capital Management’s call center.
  • She shares how she overcame career challenges, and three major investing trends she’s watching.
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There are many paths to investing and Ann Miletti likes to say that she “got here by mistake.”

Miletti studied to become a teacher but her time in the classroom was cut short when her son was born with “a pretty severe heart defect.” For the next eight months, she stayed in the hospital to care for her son while trying to figure out how to get out of the mountainous pile of medical debt they had racked up. 

“I started looking for jobs that had a little bit more flexibility to work in the evening or at night,” Miletti said. That eventually led her to a call center job at Strong Capital Management, which was acquired by Wells Fargo in 2004. 

While working the midnight-to-eight shift, Miletti studied for and passed her financial license exams. Three years later, she was hired to become the assistant of portfolio manager Richard Weiss.

“He had very high demands but also really just pushed me,” Miletti recalled. “It was a small team at the time so you had to do whatever work needed to be done. I never thought of work in a silo, I always just saw my job as doing whatever I needed to do to make his life easier.”

Besides tending to the administrative needs of the team, Miletti was also eager to learn everything, including modeling companies by hand. Soon enough, Weiss asked her to join the team as a media analyst. 

“I was a little horrified, to be honest, and said I didn’t know if I wanted a job that I didn’t think I was capable of doing,” she recalled, “and he said you’re already doing it… he saw something in me that I didn’t have the confidence to see.”

As an equity research analyst, Miletti went on to cover the biotech, pharma, healthcare, and technology industries throughout the 90s. By 2001, she started managing several mutual funds.

In 2008, Miletti was promoted to become the co-lead of Wells Fargo Asset Management‘s $4 billion-plus private market valuation team before transitioning into the head of all active equities team in June 2019. 

“Life has crazy winding roads,” she said. “For me, I needed a job so I needed to find a way to survive. I knew I had a lot to learn. I used it as an opportunity and I couldn’t say no to some of the opportunity sets.”

She added: “As a manager, what I also recognize now is that some people won’t raise their hands and you’ll see things in people that they don’t see in themselves. So sometimes you have to be the one to acknowledge and tell them that you think that they can do it.”

Managing through COVID-19

To focus on her responsibilities as the head of active equity, Miletti gave up her portfolio management duties in February last year. But overseeing all active equity strategies at a $607 billion firm still requires her to keep a demanding schedule

On a typical day, Miletti gets up at 4:30 a.m. or 5 a.m., which is about the same time that she would be in the office pre-pandemic. She checks her emails and then gets in touch with her teams to make sure things are running smoothly before hopping on meetings and special projects for the day. She takes a break at around 6:30 p.m. before logging on again later in the evening to check on things.

While Miletti appreciates face-to-face meetings more, she sees a silver lining in the challenge of managing various teams during the COVID-19 pandemic. 

“Because all of the equity managers are spread out across the country, this has allowed me to really stay in close contact with them either from phone calls or Zoom meetings on a frequent basis,” she said. 

One of the projects the investment teams at Wells Fargo Asset Management have worked on is to make sense of the legacy of COVID-19 and the investment implications of the trends accelerated or propelled by the pandemic. 

Miletti shares the three trends on her radar, which are “China’s economic shift, the scarcity of growth, and the rebirth of US manufacturing.” 

3 trends transforming the investment landscape

(1) China’s economic shift 

As global rivals saw their GDPs contract during the COVID-19 pandemic, the Chinese economy beat expectations to grow 6.5% in the final quarter of 2020 and 2.3% last year as a whole.

Above all, the growing Chinese economy is rapidly transforming from being export-reliant to one that is focused on internal growth and the domestic consumer economy.

Derrick Irwin, portfolio manager on Wells Fargo Asset Management’s Berkeley Street Emerging Markets team, believes that large-scale transformations such as this will create compelling investment opportunities. 

In a recent research report, he said that investors should focus on themes including “the continued rise of the domestic consumer class,” the “winners and losers in a changing geopolitical landscape,” and the fact that “ESG has become an increasingly important focus within Chinese companies.”  

(2) The scarcity of growth 

Leading up to 2020, the scarcity of growth in the US has been top of mind for Thomas Ognar, senior portfolio manager for the firm’s heritage growth team. 

“The long-term growth rate in corporate profits is ultimately influenced by underlying economic growth, which has been moderate by historical standards during most of the recovery from the global financial crisis,” Ognar said in the report. “This is manifest in the declining number of companies that produce expected long-term earnings growth of 15% or higher.”

He explains that this growth scarcity is accompanied by the “rock-bottom cost of capital” and the “digitization of the global economy.” As a result, the pandemic shifted investor focus to high-growth companies that were already on track to digitization. 

But Ognar does not believe the winners of this trend will be restricted to the tech sector.

“Rather, we are optimistic that the benefits will proliferate much more broadly across the corporate sector into every industry,” he said. “After all, this process was already well underway before the pandemic.”

(3) The rebirth of US manufacturing 

A renaissance of US manufacturing activities is not something that investors have expected, but it is certainly a trend welcomed by Bryant VanCronkhite, senior portfolio manager on the firm’s special global equity team. 

VanCronkhite points out that because of the mass adoption of drilling techniques and automation technologies, US production costs have become more competitive. Meanwhile, trade tensions and latent risks in global supply chains have made producing domestically more cost-effective.

On top of all that, changing attitudes about social and environmental impact as well as consumer preference for locally made products could also contribute to the rise of companies benefitting from the rebirth of US manufacturing. 

“The pandemic will not cause entire industries to pick up and resettle, but it will likely prove to be a powerful catalyst for the acceleration of reshoring, at the margin, that has already been taking place for a number of years,” he said.

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