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Strategist overseeing $124 billion in assets hasn’t been this bullish in a long time — here are two of her favorite investments for 2021

‘We’re the most bullish on the market that we’ve been in about a year.’

That’s Meghan Shue, head of investment strategy at Wilmington Trust, explaining to CNBC why she’s optimistic that the stock market has some upside over the next nine to 12 months.

She said a combination of the vaccine, the fiscal stimulus and further support from the Federal Reserve led Wilmington, which overseas about $124 billion in assets, to add to its overweight position in equities — specifically, in emerging markets and small-cap stocks.

“U.S. large-cap stocks, technology stocks, have a lot of really aggressive growth targets priced into valuations at this point,” Shue said. “We see emerging market equities and U.S. small cap as having additional upside where a lot of those… early economic cycle benefits are not fully priced in.”

Of course, there’s the potential for it all to go sideways.

“This is a challenging period right now as it relates to the virus,” Shue continued. “A main risk is that this persists for longer than many people are expecting, well into the first quarter where we have businesses that are shut down for a prolonged period of time.”

Also, a twist in the Senate runoffs could be problematic for stocks.

“If we did have the Democrats provide an upset and win both seats [in Georgia], I think you do have to weigh the risk of higher taxes in the future and more sweeping policy change that relates to regulation, energy or health care,” she said.

Then there’s the issue of two many investors sharing the same outlook.

“We all kind of appear to be on the same side of the boat, expecting the same things to pan out, so, there is a potential for an upset,” she said. “But we would encourage our clients to be looking through any short-term volatility because that is, at the end of the day, a normal part of investing.”

Watch the interview:

The weeks looks to start off with a move to the upside, with futures on the Dow Jones Industrial Average YM00, -0.12%, Nasdaq Composite NQ00, +0.09% and S&P 500 ES00, -0.30% all in the green late Sunday night.

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