Alpha Exchange Michael Contopoulos, Deputy Chief Investment Officer, Richard Bernstein Advisors
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Feb 19, 2026 Michael Contopoulos, Deputy CIO at Richard Bernstein Advisors and former sell‑side credit strategist, joins to discuss portfolio construction amid extreme US equity concentration. He explains underweighting mega‑caps, overweighting international markets, and applying a Merton framework to credit. He raises concerns about 40–50 year hyperscaler debt tied to AI infrastructure and the risks for lenders.
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Credit Is Option-Like Risk
- Contopoulos uses a Merton framework to view corporate credit as option-like, emphasizing asymmetric downside risk versus limited coupon upside.
- That perspective forces explicit volatility and duration considerations when sizing credit exposure.
Return Where Capital Is Scarce
- Long euphoria cycles reward momentum but punish late entrants, so entry price and capital scarcity matter more than popularity.
- RBA favors areas where capital is scarce because return on invested capital tends to be higher there.
Maintain Repeatable Diversification Discipline
- Use a disciplined, repeatable asset-allocation process and avoid over-diversification that dilutes active edge.
- Combine quant risk tools with fundamental signals to keep conviction without excessive single-stock concentration.