Morgan Stanley Private Wealth Management’s managing director is recommending a handful of plays to clients as the S&P 500 records a new all-time high.
The News
In a new CNBC interview, Kathleen Entwistle says that beyond the AI and tech trade, she’s urging clients to diversify and add exposure to plays outside of the S&P 500.
“If we do have any kind of a larger pullback, it would be a great opportunity to jump in… We’re putting clients in real assets right now. So we’re also looking at energy, infrastructure, things like that, the digital space… We would just stick with US, emerging markets and also start dipping our toes into the small-cap arena.”
Entwistle says her recommendations are based on inflation data. In April, inflation ran hotter than consensus expectations, opening the doors for the Fed to hike rates.
“With a market where we have the equities up as high as they are, you do want to find those opportunities. And energy is going to hold up, even in inflationary environments. And I think because of what we’re seeing in the inflation space, and also some of the signals we’re getting out of like the Fed futures, so forth on rates not being cut, but potentially being jacked up a rate or so, it’s time to consider adding some serious commodities and real assets into the portfolio.”
Looking closer at real assets, Entwistle names a few plays she thinks will do well under current market conditions.
“Well, when we think about real assets, we’re thinking about some of the things inside the market, certainly outside the market as well. But we like hedge funds. We like gold and silver and things like that. We like energy and different areas that will respond well in the kind of market that we’re in.”
What It Means for Investors
The Morgan Stanley Private Wealth Management executive appears to echo the sentiment of her colleague, Mike Wilson, who sounded the alarm about the abrupt surge in long-dated bond yields. Last week, the Morgan Stanley CIO said the market could witness its first “meaningful correction” since the S&P 500 printed its March 30th lows after the 30-year Treasury bond yield climbed to a historic level of 5.19%.
Rising bond yields typically mean investors are demanding more compensation to hold Treasuries, as they are concerned about factors that could lead to higher inflation or uncertainty.
In essence, Entwistle recommended gold, silver and energy as these assets have historically outperformed in an inflationary regime. When inflation soared in 2022, gold broke out and surged nearly 250% by early 2026.
Meanwhile, the Energy Select Sector SPDR Fund, the largest and most liquid energy ETF, soared about 130% over roughly the same time frame.
Entwistle suggests that getting exposure in commodities and energy can serve as a hedge against inflation once again rearing its ugly head.
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