MFS Strategist Shifts Focus From Fed to Capital Cycle — SkimNews
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- Robert Almeida sees a major regime shift in the capital cycle, now funding transformative technology rather than financial engineering, which he says is more consequential than Federal Reserve rate decisions.
- MFS Diversified Income fund has remained underweight technology due to its income mandate, lagging the S&P 500 with a 3.8% annualized return versus the index’s 12.6% over five years.
- Almeida draws a parallel between today’s AI investment cycle and the 2008 financial crisis, warning that if returns on AI capital investment begin to disappoint, supply chain repercussions could follow.
- Industrials such as Amphenol, Schneider Electric, TE Connectivity, Honeywell, and Assa Abloy are preferred holdings, seen as essential ‘cogs’ in building data centers and EV factories with sustainable earnings growth.
- Software names Salesforce, MongoDB, and Pegasystems are favored for their irreplaceable infrastructure roles in AI, requiring little growth to generate shareholder returns.
- Life sciences tools companies Danaher and Thermo Fisher are overweighted for their mission-critical role in AI-driven drug discovery, despite being out of favor over the past five years.
- Consumer staples Diageo and Pernod Ricard are seen as undervalued, with Almeida dismissing the narrative that younger consumers are abandoning alcohol.
Why it matters: Tech hardware investors face risk from oversupply and margin compression by 2028, while companies like Danaher and Amphenol gain relevance as essential enablers of AI infrastructure with durable returns, shifting capital away from speculative AI plays toward tangible, income-generating assets.
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