London, 30 June: With Independence Day just a few days away, three of the best selling American Equity Fund Managers on Fidelity FundsNetwork™, give their views on the outlook of the US equity market.
Tom Walker, Manager of Martin Currie North American Fund, comments: “Over the last five years, the US has lagged most other markets. That, however, might be about to change.
Many sectors have suffered from chronic under-investment for years and investing in US companies offers exposure to all of the undersupplied markets. And, thanks to the weak dollar, that growth can currently be snapped up at knockdown prices. For example customers of the electronics giant, Apple, are as likely to live in Moscow as they are in Manhattan. It is product innovation and consumer aspiration that matter to Apple - not the relative strength of the US economy.
The American stock market is so diverse, and the earnings of the companies it contains draw on such a wide variety of economic trends, that a local slowdown need not represent a problem for a bottom-up stockpicker. That's our approach and - unlike the fortunes of the US market - it's not something that's about to change."
Felix Wintle, Head of US Equities & Investment Director at Neptune Investment Management, comments: “Despite the negative headlines concerning sub-prime mortgages and US banks, at Neptune we believe that there will be parts of the US economy that will do well in 2008. Such is the breadth and depth of the world’s largest stock market that we continue to find many investment opportunities and whilst certain sectors should still be avoided, the likes of financials and housebuilders, sectors which have ex-US exposure should continue to flourish. Industrial stocks, for instance, have been benefiting from buoyant demand from the emerging markets.
As always, selectivity is central: there are parts of the economy to be avoided and there are parts to be invested in. The US is at the forefront of innovation and the keystone of the global supply and demand equation; as a result it offers numerous opportunities to be exploited – even amid the current crisis.”
Aris Vatis, Manager of Fidelity American Fund, comments: “Inflation expectations have risen recently but as the economy continues to slow down I expect inflationary pressure to moderate which will be positive for the market. The trade balance should also improve, helped by the strength in US exports of capital goods and a decline in demand from imported consumer goods as consumers decide to save more and spend less. This should be positive for the dollar.
“On sectors, financials should continue to be under pressure as write-offs are expected to accelerate in the next few months. On the other hand there are many attractive opportunities in areas like consumer staples and technology that benefit from new growth trends like acceleration in demand for smart phones and internet communication.”
FundsNetwork currently has 66 US funds available to investors and advisers. The top selling US funds on the platform year to date are:
Top 10 US funds YTD* New Money (%)
1 Martin Currie North American Fund 19.74
2 Neptune US Opportunities 13.72
3 M&G American Fund A 7.52
4 Investec American Fund 6.80
5 Fidelity American Fund 6.44
6 Threadneedle American Select Fund 5.24
7 JPM US Fund 4.95
8 Schroder US Smaller Companies 4.88
9 Legal & General US Index Trust R 3.94
10 UBS US Equity Fund 3.15
FIL Limited (“FIL”) and its subsidiary companies serve the major markets of the world by providing investment products and services to individuals and institutional investors outside the US. FIL Limited manages a total of £130.4 billion of assets**.
Notes to editors:
*Source: FundsNetwork as at 23/06/08
**Source: Fidelity as at 31.03.08
FundsNetwork, Fidelity’s fund platform, was launched in June 2000. It offers advisers and their clients the ability to invest, manage and monitor their investments in one place, bringing them control, efficiency and new business opportunities. For funds that invest in overseas markets, changes in currency exchange rates may mean that the value of your investment goes up or down. The FundsNetwork service is offered and managed by Financial Administration Services Limited. FundsNetworkTM is a trademark of FIL Limited. Any opinions expressed are made at the time of writing and can be subject to change without notification. Assets as at 31.03.08 are those of FIL Limited.
