Morgan Stanley IM: Remain Focused on Quality in Today's Concentrated Market

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By the end of June, just five stocks made up 45% of the Russell 1000 Growth® Index, and the tech sector alone accounted for 51%. As a result, many investors are not getting the portfolio diversification they expect when buying index strategies. We believe most wouldn’t be comfortable with five stocks and one sector making up nearly half of their portfolio.

At Atlanta Capital, our goal is to provide investors with greater diversification opportunities through exposure to high quality, growth companies. Our definition of high quality focuses on a company’s historical operating record—typically 10+ years of consistent growth and stability in earnings and free cash flow. We believe this long-term, disciplined approach to investing in high quality, compounding business models is key to generating alpha for our clients over time. 

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Risk Considerations: Diversification does not eliminate the risk of loss. The value of investments may increase or decrease in response to economic and financial events (whether real, expected or perceived) in the U.S. and global markets. The value of equity securities is sensitive to stock market volatility. Active management attempts to outperform a passive benchmark through proactive security selection and assumes considerable risk should managers incorrectly anticipate changing conditions. There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. The material is based upon information that Atlanta Capital considers to be reliable, however no assurances are provided. The material should not be considered investment advice or a recommendation to invest in a particular strategy. The views expressed herein are those of the investment team, are not necessarily indicative of Morgan Stanley, are subject to change, and may not necessarily come to pass.