Jacob De Tusch Lec, who runs the £3.8bn Artemis Global Income fund, has been buying stocks exposed to the US economy, as confidence grows about the health of global markets.
He said his fund remains underweight the US relative to global benchmarks - "primarily because we find plenty of cheap stocks with attractive dividends in Europe" - , but he has moved to being less underweight.
"Within that, moreover, we have added to stocks exposed to growth in domestic demand, buying retailers rather than exporters or pharmaceuticals.
"So although we are underweight in US equities, we are far less underweight in potential beneficiaries of stronger growth next year.”
Mr De Tusch Lec said there was a sharp shift in global equity market sentiment in November, as more cyclical shares such as US banks and bricks and mortar retailers performed well, while shares such as those of giant technology companies, notably Amazon and Google, were weaker.
He said the traditional retailers are currently valued as though a recession is imminent.
The fund manager said in a time when the market was skeptical about the potential for growth in the global economy, investors were prepared to pay a premium price for the shares of any company displaying reliable growth characteristics, such as the high profile tech companies.
Andrew Bell, chief executive of the £2.2bn Witan Investment Trust agreed that global growth has “broadened” with more countries around the world showing meaningful economic growth.
In such an environment, if more companies are growing, then the high valuation of those assets which are growing, such as the big tech companies, is harder to justify, he said.
The most recent data showed the US economy growing by 3 per cent, the fastest pace of expansion for two years.
On 14 December, The US Federal Reserve announced that interest rates would rise to 1.25 per cent. Janet Yellen, chair of the US Federal Reserve, said she saw few warning signs about the health of the US economy.
John Ferguson, economist at the Economist Intelligence Unit, said he expects inflation to rise markedly in the US. This is because he sees the capacity for the number of jobs to be created without wages rising to be limited, while commodity prices are also rising, which is inflationary.
Jonathan Davis, who runs Jonathan Davis Wealth Management in Hertford, said he can see little reason for the current strong performance of international equities to reverse. He upped his exposure to non-UK equities last November and has seen strong returns.
David.Thorpe@ft.com
