Ben Arnold, a Sydney-based global equities investment director, shared insights on navigating the current market landscape. His global firm oversees over $1.6 trillion in assets. Recent US earnings season updates revealed high single-stock volatility and intensified debates around AI investment justification, particularly following Alphabet’s budget increases. Arnold’s team visited Alphabet’s offices, confirming their bullish outlook on cloud business opportunities, yet he emphasises the importance of adoption rates to justify spending. Alphabet is a multinational technology company focusing on search, cloud computing, and artificial intelligence. Meta Platforms, Inc., formerly known as Facebook, Inc., develops and operates social media platforms and related services.
Arnold believes global equity exposure shouldn’t solely rely on AI and US tech. Their portfolio strategically balances long-term winners like Alphabet, Meta, and Broadcom, with European banks (BBVA, Intesa, Erste Group), Japanese healthcare (Hoya), and UK pharma (GSK and AstraZeneca) to ensure diversification. While approximately 70% of the portfolio is in US companies, many operate globally, mitigating over-reliance on the ‘Magnificent Seven’. They own Alphabet, Microsoft, Meta, and Nvidia but have no holdings in Apple, Amazon, or Tesla. Arnold notes opportunities beyond mega-cap tech, citing companies like Howmet Aerospace and TJX.
Among the undervalued stocks in their fund, Arnold highlighted European banks such as BBVA, Erste Bank, and Intesa Sanpaolo, citing improved outlooks from thawing geopolitical tensions, NextGenerationEU funding, and lower rates. He particularly praised Intesa Sanpaolo’s strategic execution and its ability to shift customers to higher-margin asset management services, supporting earnings through buybacks and strong dividends. Arnold also sees near-term upside in Tapestry, owner of the Coach brand, due to positive demand and a new management team driving improved brand perception and sales.
Arnold emphasized long-term thinking, patience, and a focus on fundamentals as key influences on his investment approach. He acknowledges the impact of macro factors but questions the consistency of forecasting them. He recommends the podcast ‘In Good Company’ hosted by Nicolai Tangen, featuring Jayshree Ullal, CEO of Arista Network, as an example of building a successful company culture. His favourite local restaurant is Pilu in Freshwater, citing it as an excellent Sardinian option.
