Lead-Lag Live Beyond the S&P 500 with Paul Baiocchi
Jun 26, 2025
In this engaging discussion, Paul Baiocchi, Chief ETF Strategist at SS&C Alps Advisors, sheds light on the pivotal shift in investing strategies beyond the dominant S&P 500. He emphasizes the megatrend of electrification reshaping the economy, driven by AI data centers and EV adoption. Paul highlights the resurgence of international markets, trading at a discount, and the potential of small caps and REITs amid improving fundamentals. His insights challenge investors to rethink traditional approaches and explore new opportunities in a changing landscape.
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Electrification as Megatrend
- The electrification theme is the biggest megatrend reshaping the economy, driven by AI data centers, EV adoption, and home electrification.
- It impacts multiple sectors like utilities, industrials, midstream energy, and materials, creating diverse investment opportunities.
Build Thematic Portfolios Wisely
- To capture a theme like electrification well, diversify across sectors and avoid single-sector exposure.
- Use a durably constructed portfolio with balanced, equally weighted companies across utilities, industrials, energy, and materials.
Potential International Market Shift
- U.S. outperformance of international markets lasted 16 years, but international markets now have better valuations, stronger earnings growth, and a weakening dollar.
- These factors could support a multi-year period of international market outperformance if fundamentals and policy hold.