Invesco's Sergio Marcheli says many 401(k) menus have drifted toward growth

Advisors and sponsors who have not looked lately at how their 401(k) menu's style mix got where it is got a nudge from Invesco's Sergio Marcheli, who argues that a decade of low rates and narrow mega-cap technology leadership left many participant portfolios and plan menus with growth-biased allocations that were accumulated more than chosen. He calls the tilt unintentional and says it requires style rebalancing. Marcheli, Invesco's U.S. senior client portfolio manager, made the case on the 401(k) Specialist podcast with the publication's editor-in-chief, Brian Anderson.

The macro argument he builds starts with the rate regime. After a decade defined by low rates and a narrow set of mega-cap tech winners, higher inflation and interest rates have refocused market attention on balance sheets, earnings and valuation discipline. Valuation gaps across the market remain wide, which he describes as creating hunting grounds outside traditional mega-cap growth equities.

The framing he offers advisors and sponsors is deliberately narrow: evaluate whether the lineup carries appropriate value exposure, rather than whether value will beat growth next quarter. Avoiding the cycle call is the point.

His sector calls are bottom-up: industrials, helped along by infrastructure spending, AI investment and reshoring; discounted healthcare franchises; select volatile technology names. He also takes on the assumption that value means owning stagnant businesses, arguing that value managers often buy growing firms where market sentiment has turned more pessimistic than fair value warrants.

On the allocation question, his answer is to hold both styles rather than rotate out of one. Growth and value, in his framing, serve as complementary styles rather than competing ideologies, and a balanced mix of both across market capitalizations helps participants navigate shifting leadership without having to time economic cycles. He adds that higher rates, persistent inflation and wide valuation gaps have moved market dynamics away from pure momentum toward fundamental cash flows, which is where he locates the case for value strategies in a retirement portfolio.

The practical gap is measurement. A podcast interview is an argument, not a survey of plan menus, so the scale of the growth tilt Marcheli describes is his characterization rather than a counted figure; the source material offers no data on how many plans have drifted or by how much. What it does supply is a test any committee can run without hiring anyone: pull the allocation from the recordkeeper's holdings report and set it beside the policy target the committee last approved.