Next year's winners: Big multinationals

Most of the easy money has already been made in this market rally, making 2010 a “stock-picker's market” that requires more investing skill and analysis, says Adriana Posada, manager of the $6.8 billion American Beacon Large Cap Value Fund (AVASX) from American Beacon Advisors Inc. “The earlier part of the rally was more of a relief rally when everything came back, and those companies that were hit hardest [during the correction] did the best,” she said. “But now, some sense will be coming back to the market and not everything will do well.” Ms. Posada said companies most likely to outperform in the next stage of the market cycle will have strong balance sheets, niche products and superior management teams. “Despite the 2009 run-up in equities, a lot of the best companies have not run up as much,” she said. “Our portfolio is positioned for economic growth by strong multinational companies that can take advantage of the weaker dollar.” The fund is managed by four subadvisers who each oversee a portion of the assets independently. Ms. Posada oversees the subadvisers. While Ms. Posada said the “overall economic picture today is still not terribly bright,” she believes the portfolio of about 150 stocks is in an ideal position. “In terms of the quality and value of the portfolio, it is probably in a better position than it had been in over the past five years” she said. The fund has gained 25.6% this year through Tuesday. This compares to a 23.8% gain by the S&P 500 over the same period. Ms. Posada acknowledged a long list of lingering problems in both the economy and the stock market, ranging from the ravaged housing market and high unemployment to tight credit markets and “mind-numbing federal debt.” But she added that the debate “has started to shift from whether the economy can grow to how strong the growth will be.” Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives .