CNBC Pro Talks: Portfolio manager Trent Masters on how to beat the market

Stock markets around the world had a horrible 2022, but veteran fund manager Trent Masters sees a brighter side to last year’s market turmoil.

“I’m quite encouraged by what has happened over 2022 because I think markets have become fundamentally disconnected from the underlying drivers. We did have that madness in terms of trading capital. And so, I think what we are seeing now, particularly across tech, is a very healthy focus on profitability,” Masters, portfolio manager at Alphinity Investment Management, said in the latest installment of CNBC Pro Talks.

Nevertheless, he remains “quite cautious” going into 2023, citing over-optimistic earnings expectations as a potential “drag on markets” this year.

In a wide-ranging chat, Masters shared his portfolio strategy and named the stocks he owns in an effort to navigate what he expects to be a turbulent second half of the year.

He said his firm does not own shares in any big tech names currently, save for a residual position in Apple, but shared his views on the sector more broadly and named the tech stock he finds “more interesting.”

The cybersecurity sector outperformed the broader tech sector last year, and Masters remains bullish on its longer-term prospects. He named a cybersecurity stock that he said has consistently taken market share from peers, has a strong balance sheet and the potential to achieve growth of more than 20% in the coming years.

Meanwhile, China’s shift away from zero-Covid has raised hopes of a boost for the commodities sector, with Masters naming an Australian commodity name that is “very well positioned” to benefit from the country’s reopening.

On the beaten-down semiconductor sector, Masters still sees opportunities in the space, naming one company with exposure to the electric vehicle transition and another that is “absolutely unique” in what it does.

Masters manages the Alphinity Global Equity Fund, with holdings including global stocks in the consumer discretionary, tech and health-care sectors, among others.