In reviewing the performance of various markets, it may come as a surprise to some that US equities have outperformed most other major markets. Over the past five years, US equities have even outperformed Asian markets.
During this time, the allocation to US equities within the Aberdeen Multi-Manager range has increased and is now at around peak levels in comparison to history. This reflects a number of factors that have helped to support the investment case.
First, the US authorities acted quickly after the credit crisis to support both the financial sector and broader economy. This in turn has allowed the market to heal at a faster rate than comparable Western peers. The US economy is also more flexible than much of its developed counterparts, has a positive demographic and remains one of the most innovative regions.
Historically, the US sector has been one of the hardest regions to select high quality managers. Indeed, a number of asset allocators utilised tracker funds or exchange traded funds, having given up on active US managers.
However, for UK and European investors the choice of high quality US managers is significantly better than before. Not only do UK investors have a choice of solid managers based in the UK, but a notable trend has been the increased number of US based managers seeking to distribute funds into our market. In many respects this move has been timely, given that the allocation to US equities has also increased.
Examples of US based managers that have launched funds into the European market include Brown Advisory, Cullen Funds, Montag & Caldwell, Brown Brothers Harriman, DSM Capital Partners and Delaware, to name a few.
While only one could be labelled as a core manager (Brown Advisory US Equity Growth), the other managers offer ‘style’ funds, which can be combined to provide a balanced US portfolio.
Closer to home, we have invested in the Findlay Park American Fund for over a decade. During that period we have been fortunate to benefit from the compounding of superior returns achieved through a disciplined investment process.
We have also been invested in the Threadneedle US Extended Alpha Fund, identifying Stephen Moore as a talented individual within a high quality team. Seeking to provide an all-weather core proposition, this fund has navigated these volatile markets exceptionally well and provides a perfect example of fund managers’ ability to add value in the US market.
Given the negativity currently surrounding the US economy, investors would do well to note the strong relative performance of US stock markets and also debunk the myth that active management does not deliver in such a large and, supposedly, efficient market.
Rob Bowie is senior portfolio manager at Aberdeen Multi-Manager Funds