The managers of the £3.6bn JP Morgan US Equity Income fund are looking to consumer and healthcare shares to find value from a market where valuations are seen by many as expensive.
Clare Hart, who jointly runs the fund, said: "Many investors regard US shares as expensive but said the rise in share prices of late has been accompanied by a rise in the earnings being achieved by the underlying companies, meaning the higher share prices are justified."
She said concerns about the US economy had meant some stocks exposed to the US economy were "beaten down".
With this in mind she has invested in fast food chain McDonald’s, which she said was attractive as a defensive investment if the economy performed poorly but was exposed to the US consumer, a group that should have more spending power if the economy continued to perform well.
Ms Hart added she had increased her investments in healthcare throughout the year.
She regarded the chances of the US slipping into imminent recession as "low".
John Greenwood, chief economist at Invesco, said he didn't expect the US economy to slip into recession soon and that while interest rates and inflation were rising, money supply growth, a piece of economic data which indicated when credit bubbles were developing, remained muted, so inflation should remain at a relatively low level.
In such a scenario the pace of interest rate rises shouldn’t accelerate, meaning Mr Greenwood didn't predict a US recession before 2021. He didn't expect the continuing trade dispute between the US and China to cause a recession either.
Luca Paolini, chief strategist at Pictet Asset Management said: "The investment case for healthcare is much more clear-cut. It is well-placed to benefit from continued investor preference for defensive sectors, while still offering exposure to long-term secular megatrends through latest medical innovations."
david.thorpe@ft.com
