Rathbones head of multi-asset investments David Coombs has tipped America as the next growth market and has added a growth bias to US exposure in his multi-asset portfolios.
Coombs has identified the ‘Rust belt Tigers’, which are the Midwestern and North Eastern US regions including Illinois, Ohio and Michigan, as the areas most likely to see increased levels of growth in the US.
Coombs says there is now a recovery in the US housing market and adds that the fiscal cliff should no longer derail an economic recovery, although there will be some tightening of fiscal policy.
He says: “We are adding a growth bias toward US exposure in our multi-asset portfolios. The US equity market is looking fair value. There is a feeling that in a cyclical, below trend recovery, companies that grow will demand a premium rating.
“There is growing evidence of something significant happening that could well challenge the West to East investment theme that has anchored consensus wisdom over the past 10 years.”
Hargreaves Lansdown senior investment manager Adrian Lowcock says: “I think people underestimate the US in terms of its ability to surprise and on the upside, US growth is starting to improve and if the US can get it going then it will help the rest of the world.
“However the growth story in the US is not a one way thing. It is going to be a rocky ride and there could still be areas impacted by cuts.”