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Tony Genua has spent more than four decades as a portfolio manager, but his investing passion really took hold in his youth. In high school, he bought financial stocks and others. While studying economics at Western University, he traded equities and commodities. He was even long gold when it was just US$100 an ounce. Despite value investing’s popularity, he gravitated toward more dynamic opportunities in growth stocks. That has worked out well. His $4.2-billion AGF Global Select Fund (series F) has outpaced the MSCI All Country World Index since he took it over in 2013. He also oversees the $3-billion AGF American Growth Fund. We asked Genua why he’s bullish on the U.S. market, and why he’s a fan of Nvidia and Amazon.

What’s your strategy to outperform benchmarks?

I try to capture the market leaders in every cycle. The driving forces for new leadership are innovation and a changing macroeconomic environment. If a company doesn’t have R&D dollars resulting in new products and services, another firm will grab market share and get rewarded. Where we are in the economic cycle can also be a tailwind for growth or a headwind. When the economy shut down during the COVID-19 pandemic in 2020, we bought names such as Zoom and Teladoc Health, but later sold them.

Given that your global fund has a hefty North American weighting, what’s your outlook for the U.S. market?

I believe that we’re in the second year of a new bull market. Over the past 75 years, there has never been a negative return in the second year of a bull run. There is a U.S. election this year, and the average election-year return since 1900 has also been positive. The main driver for the market is rising earnings, and that will fuel the market higher. There is also about US$9 trillion in money market funds and equivalent deposits. Some of that will find a home in equities as interest rates come down.

How does your outlook affect what stocks you own?

Now that the majority of the move up for interest rates has occurred, we have been rotating back to higher-growth names. By the start of next year, we’ll be talking about a global synchronized recovery and will look for more cyclical growth securities.

Among the Magnificent Seven tech stocks, which drove most of the S&P 500′s return last year, you only own chip maker Nvidia, as well as Amazon. Why?

Both have strong earnings growth and an attractive valuation. We are starting to see major benefits from artificial intelligence. Nvidia is the poster child for AI, and there has been tremendous demand for its chipsets. It has seen the most benefit to its revenues based on generative AI or, more specifically, large-language models. By year-end, I also expect material developments from Amazon. It’s the largest cloud computing provider, and data is foundational to reap the benefits of AI. Through a recent joint venture with AI startup Anthropic, Amazon will roll out more products for its customers.

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Pharma giant Eli Lilly is a top holding in your funds. How big a tailwind is its weight-loss drug Zepbound?

Eli Lilly and Novo Nordisk have GPL-1 drugs that were initially developed for diabetes but are addressing the problem that obesity poses for individuals and the health care system. There is so much demand, but Eli Lilly may be in a better position to ramp up production. It has just teamed up with Amazon Pharmacy to deliver Zepbound and other medications. Besides its obesity drug, Eli Lilly has an active pipeline focused on Alzheimer’s and cancer therapies.

Growth funds don’t typically hold energy names, but you own Cheniere Energy and Marathon Petroleum. Why is that?

We don’t typically invest in exploration and production companies. We bought those names in 2020 during the pandemic shutdown, and the opportunity is more long term. Cheniere Energy is the largest U.S. producer of liquefied natural gas that will be in demand because it’s a cleaner fossil fuel than oil and coal. Marathon is an oil refiner that also produces jet fuel and will benefit from growth in air travel.

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