Trusts with super-sized US exposure not fazed by election

Figures from the Association of Investment Companies revealed the £213m Martin Currie Global Portfolio trust has as much as 59 per cent invested in the US market.

This comes despite UK investors taking a more negative view of the US stockmarket as the 8 November election date nears.

Portfolio manager of the Martin Currie trust Tom Walker said the US economy has the best growth outlook of all developed countries, pointing to the mature and highly competitive nature of the market.  

“Many US companies are among the best quality in their sectors in the world – particularly in the technology sector.

“The US election is top of mind but currently I have taken the view that Hillary Clinton will win,” he said, describing Clinton as the “status quo candidate”.

The £192m Securities Trust of Scotland was second place with 56 per cent exposure to the US.

Manager Mark Whitehead said companies in the States have been more proactive in the aftermath of the financial crisis in restructuring their operations compared to other regions.

This, he said, has enabled them to invest more in growth, while macroeconomic conditions in the US appear to be improving.

Third on the list is the £121m Mid Wynd International Investment trust with just under half of the portfolio exposed to the North American markets.

Co-manager Alex Illingworth, echoed the point about high level of growth coming from the US, adding he tends to look for companies which “access the spending power” of the older generation.

“This demographic is a structural growth area for America, but it isn't for Japan, where the population has already got old.” 

He said he does not take a view on macro and exogenous events such as the upcoming election, preferring to focus on the companies that can grow their business regardless of factors outside of their control.  

“All our companies need to prosper, is order in Washington, and we would worry about unpredictable policy changes.  

“As such, a continuation of Obama policies, which Hillary Clinton appears to mostly offer, would be preferable.”

Meanwhile, James Henderson’s £829m Law Debenture Corporation trust is at the bottom of the exposure pile with just 10 per cent of the portfolio allocated to the US.

 “The UK market offers higher dividend yields than other major markets, and the dividends from the UK market are expected to grow substantially above inflation over the coming year.  

“This explains why my exposure to the US is relatively low,” he said.  

Investment companies in the Global and Global Equity Income sectors - US exposure

Source: AIC