Helping clients navigate structural change through active management

Seth Meyer: Hey, everyone, it’s Seth Meyer here at the Milken Institute Global Conference in Beverly Hills. I’m delighted to be joined today by two of our thought leaders. And we’ve spent the last couple of days learning from a lot of our clients around the world about what’s driving their investment decisions and how they’re thinking about the future of investing.

With me today is Kelly Cavagnaro, the head of U.S. institutional, and Jonathan Coleman, a U.S. equity portfolio manager.

Kelly, obviously, we’re here where a lot of the largest clients in the world are present. What do they really want to talk to you about today?

Kelly Cavagnaro: We’re having so many interesting conversations with clients here at Milken. It’s been so fun so far, Seth. Thank you. You know, one of the deep trends that’s emerging, certainly, is this idea of massive structural change across every geography and every institutional client channel. And the topics differ, whether it’s AI or geopolitics or energy transition. But underlying all of that, absolutely, is this question of how to navigate all of this structural change while still staying true to core values like portfolio governance and resiliency and shareholder trust.

And the answer that’s emerging is that while people still definitely want resiliency, they want it with accountability and with deep research and backed up by forward-looking thoughts with very strong partners.

Meyer: Great. So, Jonathan switching to you … Kelly weaved in a couple investment themes. What has been interesting for you over the conference over the past couple of days?

Jonathan Coleman: Yeah, I’d actually like to pick up on a thread that Kelly was talking about in terms of structural change. And one of the things that we see from talking to lots of companies every day as part of our fundamental due diligence process is the opportunities that are created from deglobalization.

So, we know that deglobalization is going to be inherently inflationary, if we do nearshoring and onshoring and we have to replace supply chains that have been built for efficiency but now will be built for redundancy. Intriguingly, I live in the small-cap world, and that’s a great opportunity for small-cap companies. That seems counterintuitive to most investors, but actually we’ve done a lot of research at Janus Henderson. Go back 50, 60 years, the single best decades in history for small-cap companies have been periods where we have had inflationary environments. So, the period of the 1970s and then the first decade in the year 2000, and we think we’re entering a period like that.

And interestingly, small caps have started to outperform large caps. That’s not well appreciated by many market participants. But over the last year, the small cap benchmark [the Russell 2000^® Index].has outperformed the S&P [500^® Index] by over 1000 basis points.* So, we’re excited about that.

Meyer: Yeah, I mean, it’s a really interesting theme when you’re talking about the geopolitical realignment. It’s been a theme we’ve been talking about quite a bit here at Janus Henderson. And if anything, it’s even more appropriate today than it was even a couple of years ago when we were discussing it. What does it mean – onshoring, reshoring … what it means for costs, what it means for inflation, and things you’re talking about.

So maybe, Kelly, as you’re thinking about the asset management industry as a whole, how are you thinking about the future of it as we look forward and kind of how our clients are thinking about what we do every day and how we can help them?

Cavagnaro: Yeah, absolutely. Well, you know, it’s interesting that the theme here at Milken is leading in a new era. And definitely the dominant tone here is one of adaptation and progress, but with, you know, thought and purpose. And the institutional community is definitely no different. They are definitely recalibrating right now, as well. At Janus Henderson, you know, our job is to partner together with our clients to really help them prepare to meet their investment objectives on a forward-looking basis.

Meyer: Jonathan, do you have anything to add to that?

Coleman: Yeah. So, I think another important theme that certainly has been much discussed at the Milken Conference this year has been the trends in AI. We really view that from a small-cap lens as creating a really wide dispersion of winners and losers. That’s always been the case in small cap, but I think it’s even more so now. And we really think that’s a great opportunity for active management to really differentiate itself from passive. And so that’s something we’re looking forward to and talking to clients about as we look to the next decade.

Meyer: Yeah, it’s been interesting. You made the point on small cap outperforming large cap, and a lot of people not really paying attention there. It’s also been permeated beyond just the Mag 7. So not just a small-cap phenomenon, but even in large cap equity, there’s now some opportunities that maybe in the narrowness of the market that we saw over the past couple of years are starting to broaden and benefit materials or energy or power or utilities.

So, any other any other kind of standout breakout sessions that you guys would like to highlight?

Cavagnaro: So many at Milken, as always Seth, of course. My favorites are always the ones that connect kind of those big themes of structural change with, you know, investor behavior. And a really good example of that is our CEO Ali Dibadj’s session. And it really asks the question, “Is AI rewriting the global growth model?” And I like it because it takes the, you know, tech theme and doesn’t put it in a little box but really connects it to consumer behavior and productivity and global growth. And a lot of sessions did that this week, really kind of took one specific theme and really connected it across a lot of different topics.

And the takeaway from all of those is absolutely that investors need to be more active and more selective in their partners and more forward looking, because those forces are going to continue to impact investment outcomes for years to come.

Meyer: Jonathan, do you have anything to add?

Coleman: Yeah, I would maybe take a little different tack. I’m always intrigued by leadership and studying great leaders and had the great opportunity this morning to hear from María Corina Machado, who could be a future president of Venezuela. She’s still campaigning for free elections in Venezuela and hearing her clear-eyed vision, her compelling case for bringing democracy to 30 million people and 8 million people in Venezuela who had been displaced all around the world, was really inspiring.

And I think you see those common threads of leadership between company CEOs that we meet with and heads of state, and so, just being able to see her up close and personal was interesting. And I hope to be able to kind of weave some common threads as we think about dynamic CEOs that can transform their businesses.

Meyer: Yeah, I too sat on that breakout session and found it not only inspiring, but really moving, actually. It makes you feel really optimistic about kind of how you look as you look forward.

Well, thank you guys, both for sharing your insights. And thank you so much for taking the time today to discuss the future of asset management and how you guys are thinking about the Milken conference as a whole. Obviously, this is what we’re doing every single day of our lives at Janus Henderson is really figuring out ways and innovative solutions to provide really accessible product to our clients. So, thank you so much for your time and goodbye for now.

*For the one-year period ending 30 April 2026, the Russell 2000 Index gained 44.41% and the S&P 500 Index returned 31.05%.