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$450 billion fund manager: Why I'm buying this dip

$450 billion fund manager: Why I'm buying this dip

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$450 billion fund manager: Why I'm buying this dip

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Jitters from emerging markets may be hurting US stocks but that may not mean it's time to get out yet, says one very large investor.

Seth Masters, Chief Investment Officer at Bernstein Global Wealth Management, a firm that has $450 billion in assets under management. Masters believes investors should continue holding stocks even though the benchmark S&P 500 is down nearly 6% so far this year.

(Read: Market strategists: Don't overreact here)

"Definitely stay the course," says Masters. "[Investors] need adequate exposure to return-seeking assets that are attractively valued or reasonably valued and that over time can have growth. That remains true, especially now with yields still very low on almost all bonds."

Though stock prices have risen over the past few years, Masters sees one of the important catalysts as being the overall improvement in the quality of earnings and the financial health of many major companies.

"What you're seeing is high quality earnings which are also being used wisely by companies," says Masters. "The net debt-to-equity for the S&P [500] has dropped over the last five years from 60% down to now 26%. In other words, companies are now using all that money they're now generating in ways that are shareholder-friendly, like paying down debt and also paying dividends."

(Read: US small businesses borrow more, signaling growth ahead)

"Companies are not expensive and investors can get a decent return over the next few years from them," says Masters, who is not deterred by the over 100 point drop in the S&P 500 since the start of 2014. "Market dips like this are a buying opportunity for that reason.

To see the rest of the Masters' take on the markets in light of the recent pullback, watch the video above. 


More from Talking Numbers:

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