First, he would goal a bunch that has reaped massive positive aspects since late final yr: small caps.
“We nonetheless assume it has some room, and I feel loads of it comes right down to the stimulus that is nonetheless within the pipeline,” the agency’s chief funding officer informed CNBC’s “Buying and selling Nation” on Wednesday.
He additionally sees small caps persevering with to profit from pent-up demand created by the coronavirus pandemic and spending energy.
“There’s $1.5 trillion extra in shopper financial savings in the present day than there was presently final yr,” stated Mills. “We predict all of that together results in higher efficiency from areas like small caps.”
The group has been a profitable commerce on Wall Road. The Russell 2000, which tracks small caps, has soared greater than 42% over the previous six months. The rally even gained momentum in November when Pfizer and Moderna reported encouraging outcomes associated to their respective Covid-19 vaccines.
Regardless of his bullish case, Mills will not rule out near-term turbulence.
“Inflows have been fairly aggressive into small cap ETFs, so I would not be stunned if we noticed a little bit little bit of a pause right here,” stated Mills, a CNBC contributor. “However that type of momentum, that type of 99th percentile momentum, tends to be a very good factor for returns searching over the subsequent 12 months.”
His second high play: rising markets.
“I do assume the greenback continues to be supportive there. You may have that destructive correlation between EM shares and the greenback,” he stated.
Mills, who has $18.9 billion in property beneath administration, is broadly optimistic on the group. The iShares MSCI Rising Markets ETF is up greater than 29% within the final six months.
Nevertheless, his suggestion comes with a caveat.
“I’d watch China a little bit bit. They’re engineering a little bit of a slowdown,” he famous. “However I really assume that is a very good factor to keep away from that boom-bust cycle.”
Mills considers his third play on actual property funding trusts as contrarian.
“It is a very uncrowded space that advantages from this sort of financial restoration that we’re nonetheless forecasting,” he stated.
The Actual Property Choose Sector SPDR Fund is down greater than 9% over the previous yr. However over the previous month, it is up about 5%.
Mills significantly likes specialty REITs.
“It is now 43% of REIT indexes. In order that’s issues like communication towers, information facilities, self-storage services — not essentially the businesses you’ll consider when excited about REITs,” he stated.
Mills’ funding timelines are usually at the very least a yr. Though his picks are unlikely to be quick cash performs, he believes they need to be embraced — significantly as particular person buyers grow to be a better drive available in the market.
“Inflows coming in from retail buyers must be on the margin a help right here,” Mills stated.