And Bryant, that brings us right to you and your value-oriented fund. Of course, tech a clear beneficiary from AI, and we've heard a lot of talk coming from productivity gains and other sectors from the AI buildout. Where are you seeing value and AI intersect? Is there anywhere where that Venn diagram crosses?
Yeah, sure. We certainly saw the same thing Todd saw, which was financials, especially banks, were highly attractive coming into the early part of the year and through today. Within financials, we're rotating capital from banks into capital markets. We also saw the tech benefits as well, and we own Alphabet, which has been a nice success for us. But now is a time, in our opinion, to begin shifting and broadening your exposure. The next wave of AI benefits maybe doesn't accrue to tech directly, but rather to the users of AI when it comes to expense cuts, but also into a broader theme that's going to not only embrace the benefits economically of AI, but also partner that with the tax benefits from the one big beautiful bill that will enhance and push capital to be deployed through companies today saying that capex is re-escalating right now. And also we see great balance sheets across most of the corporates that we invest in, and they're using that to buy back stock.
And so today, we want to take some capital out of the past winners, tech, maybe some financials, and move it more towards industrials and materials where we're seeing offense opportunities. And then to Todd's point, we actually really like healthcare. There's some big secular tailwinds in healthcare that we think are being ignored due to some political and some cyclical issues, but healthcare in certain pockets looks really attractive to us today.
Yeah, maybe some second derivative beneficiaries of AI there. Todd, you note that we're coming up on year four of the current cycle, and agree it makes sense to add tilts to active and value for diversification purposes. Do bull markets, do cycles die of old age?
That's usually the case. I think this is more about the concentration problem that's plaguing a lot of passive indices, right? You have 10 stocks that are almost 40% of the S&P 500. That's a 50-some-odd-year high. It's 60% in large-cap growth. And so if you don't do your due diligence on ETFs and you own a blended large-cap fund and a growth fund and maybe a thematic tech-type fund, you have a lot of exposure to a small cohort of related tech and AI names. And so I think this is where, especially as this cycle ages, having an active manager involved makes sense, and then also tilting towards value. So active value we think is a very good proposition heading into 2026. Maybe it's not necessarily the bulk of your portfolio, but just add it in there. Just get something different besides a tech and growth-heavy portfolio.
And keep in mind, stuff like small caps or transportation stocks, Bryant mentioned the industrials, a lot of those have not really participated from a technical perspective over the last couple of years. So to us, we like this idea that there are corners that have been in a bear market or just a big trading range for the last three to four years. So that leaves us with a lot of opportunity away from growth and tech-oriented names that investors really should consider for their portfolios going forward.
Yeah, that concentration risk remains front and center. Bryant, take us a little deeper into ASLV. Some of your top picks within the fund are Canadian Pacific Kansas City, Vulcan Materials, and Labcorp Holdings. Why do you like each of those?
Yeah, the Allspring Special Large Cap Value ETF, ASLV, is designed to take advantage of companies that are going to use their balance sheet flexibility to control their own destiny, to invest in their future. And of course, we want to capture that along with the tailwinds of the economy, which we're talking about. And so in the case of CP, Kansas City Southern, so Class I rail, the only one that's transnational from Mexico through the US to Canada, the stock today is being, I think, caught up in a lot of the rhetoric around integration and acquisitions within the Class I rails. We understand that. But underneath all that, we have Kansas City, Canadian Pacific and Kansas City Southern working together to integrate the acquisition they made a couple years ago, which we think ultimately is still underpriced. We're going to see length of haul increase. We're going to see pricing go up. We're going to see margins expand as they get more operating efficiencies. And on top of that, if there is integration in rails, they probably are going to be a beneficiary as some of the required asset sales from the merged companies come CP's way. All of that will also benefit from, we think, a nice onshoring trend in the US. Not to mention, Mexico is now the largest importer to the US, just now surpassing China. So that's a great way to capture a bigger theme while actually harnessing the individual investments CP's making.
Vulcan just really quickly.
No, that's what I was going to ask. Vulcan.
