While there could be more volatility in markets over the next few days and weeks, some investment experts have said there are likely to be beneficiaries from Donald Trump’s Republican administration because of he is likely to be pro-business and plans a fiscal stimulus programme with significant infrastructure spending.
Experts FTAdviser spoke to all agreed that his election is good news for the pharmaceutical industry, which could rebound from subdued levels when the market was concerned over the impact a Clinton presidency would have had on their businesses.
In terms of funds that are set to prosper under Mr Trump’s reign, Darius McDermott, managing director of FundCalibre, said the lead manager on Brown Advisory US Flexible Equity is an industry veteran with 30 plus years of experience in steering investors through market ups and downs, which may prove invaluable over the coming months.
Mr McDermott also pointed to Axa Framlington American Growth fund, which is run by another highly experienced manager, Steve Kelly, who focuses on finding companies with a unique competitive advantage, regardless of macro conditions.
For something a bit different, Mr McDermott recommended Hermes US SMID Equity fund, which invests in a concentrated number of smaller and medium-sized companies.
Mr McDermott said: “This may make it more volatile than larger cap US funds, but as we saw in the UK post-Brexit vote, smaller companies can sometimes surprise.”
Adrian Lowcock, investment director of Architas, pointed to Majedie UK Equity fund as one vehicle that could do well under Mr Trump’s presidency.
The fund is run on a multi-manager structure, with individuals responsible for sub-sectors within the fund.
They share a core philosophy to be pragmatic and flexible, and as such they seek to buy shares with the highest upside potential.
There is a focus on valuation gap and the fund has targeted deep value sectors of the markets.
In recent years the themes in the fund have been banks, oil and gas and miners which they started to buy into last year, albeit early.
These sectors could benefit from the expected fiscal stimulus programme resulting from the election of President Trump.Adrian LowcockMr Lowcock said: “These sectors could benefit from the expected fiscal stimulus programme resulting from the election of President Trump and which is expected to spread across developed markets.”
He also highlighted JPM US Equity fund under manager Clare Hart as a vehicle with a quality, value style bias.
He said: “Their definition of quality is a durable franchise, not overly levered balance sheet, quality of earnings streams and a solid management team. Quality is the priority but they also want to ensure they are paying a good price.
“The fund has around 10 per cent in banks and pharmaceuticals which have held back performance in the run up to the election, but should rebound following the result.”
JO Hambro UK Equity Income fund, managed by Clive Beagles and James Lowen, was also recommended by Mr Lowcock because it looks for companies which have an above average dividend yield and where investors do not fully appreciate the potential for future earnings and dividend growth.
This usually leads them into out-of-favour areas of the market, with a bias towards higher risk small and medium-sized companies, according to Mr Lowcock.
He said: “Whilst there is more of a domestic focus to this fund it is well positioned to benefit from the fiscal spending boost we could expect from a Trump presidency as the fund has significant exposure to the mining sector and banks. “
But Jason Hollands, managing director of business development and communications of Tilney BestInvest, said Mr Trump’s agenda - as far we can determine - is pro-domestic growth through tax cuts and infrastructure and clearly reflationary.
As a result, Mr Hollands said he was not sure that he would agree with Mr Lowcock on the UK equity funds he selected as particular plays on a Trump administration other than the collateral benefit of increased prospects for a UK-US trade deal.
Mr Hollands said: “If you really want to play a Trump boom, you need to be looking for infrastructure funds with high US exposure, funds with high exposure to US financials - Trump wants to reign back on the Dodd Frank reforms and higher interest rates should also allowed for margin expansion at US banks.
“What you need to be short of are emerging markets and Treasuries.”
As an investor I wouldn’t base my strategy on what Trump may or may not achieve as president.Laith KhalafLaith Khalaf, senior analyst of Hargreaves Lansdown, said on the back of Mr Trump’s victory there was some strong performance from pharmaceuticals, so many equity income funds, for instance Neil Woodford’s, will benefit from that.
Mr Khalaf said: “However as an investor I wouldn’t base my strategy on what Trump may or may not achieve as president.
“I think investors should predominantly choose funds on the basis of the quality of the manager and the charges, because ultimately those are the two things that are going to make the most difference to their net wealth.”
emma.hughes@ft.com
