Treasury Manager John Davi is bracing for challenges related to President-elect Donald Trump's tariff agenda.
Davi said he fears the new government's policies could be “very inflationary,” which is why he believes it is important to choose investments carefully.
“Small-cap industrials make more sense than large-cap industrials,” the CEO of Astoria Portfolio Advisors told CNBC’s “ETF Edge” this week.
Davi, who is also the company's chief investment officer, believes the red line will help advance a growth and domestic policy agenda that will benefit small caps.
It appears that Wall Street agrees so far. Since the presidential election, Russell 2000 The index, which tracks small-cap stocks, is up about 4% since Friday's close.
Davi, whose company manages assets worth $1.9 billion, also likes to stay in the country despite the customs risks.
“We are overweight in the US. I think this is the right strategy for the next few years leading up to the midterms,” Davi added. “We have two years where he [Trump] can control much of the narrative.
However, due to challenges related to the growing fiscal deficit, Davi plans to stay away from fixed income securities.
“Be careful when owning bonds in any case,” Davi said.
Since the election the Benchmark 10-year government bond yield is up 3% since Friday's close.