The US has been on a winning streak so far in 2013. There has been great rise in employment levels alongside the S&P 500 reaching record highs.
Some argue there’s never been a better time to up your exposure to the country. Here are five things to consider when doing so.
1. Choose which route to take. There are many ways to access a country: active, passive and investment trusts, for example. US active funds traditionally have never sold very well in the UK. Investors tend to overlook the country, favouring the cheaper, more developing countries, or staying on home turf. You or your client may be more suited to a passive entry to the country.
2. Look at the strategy. North American active funds take one of two strategies: growth or value. Different managers will take different routes depending on what is happening in the US markets at the time.
3. Find out market cap. One misconception about market cap is its being comparable around the globe. This couldn’t be further from the truth. If you are investing in a US small-cap focus fund, don’t expect to be seeing small-sized firms. In fact, some managers say that small- and mid-cap funds in the US are actually the equivalent to some FTSE 100 sized firms. US large-caps could be more like UK mega-caps.
4. Look at the fund’s allocation. This may seem an obvious one, but look at where the manager is allocating to before investing. You may be hesitant on some levels of exposure, such as housing or auto markets, but Gary Potter, co-head of the F&C multi-manager team, says the recovery we are currently seeing in the housing and auto markets now is “material and significant”.
5. Consider using a multi-manager. If you want to increase your US exposure but do not want to invest into a US-specific fund, try looking at which multi-manager funds have exposure to the US and then you can gradually increase that way. Multi-managers may have access to a variety of different funds that are not normally available or easily accessible, such a boutique fund managers.
More tips from Money Management
