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Investors look to defensive US assets for 2019

Investors look to defensive US assets for 2019

Worries about the health of the US stock market after a lengthy period of outperformance has prompted managers to embrace more defensive American assets.

Andrew Herberts, head of private client investments at wealth manager Thomas Miller Investments, said he wasn't expecting a prolonged economic slowdown because "there is enough good news in the economics and earnings data to support the market going up".

But he said that while he maintained broadly the same asset allocation, he has moved to more defensive funds.

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Mr Herberts said that in the US market this prompted him to invest in the JP Morgan US Equity Income fund, "which is less exposed to the economic cycle than many other US funds".

He had also invested in the Vontobel US equity fund for defensive reasons.

Romain Boscher, global chief investment officer for equities at Fidelity International, said an unusual set of circumstances, including the one-off boost from corporate tax cuts, meant US corporate earnings were artificially high in 2018 and would be lower in 2019.

He predicted some parts of the US economy, such as car sales, would do badly next year but that others, such as software, would perform well.

Nick Ford, who jointly runs two US equity funds at Miton, said he had avoided major US tech stocks and instead focused on companies which operated primarily within the US domestic economy, as they tended to have smaller valuations despite the US domestic economy performing strongly.

David Millar, investment director at Quilter Cheviot, said "one would need good eyesight" to detect signs of a slowdown in the US economy and he was more worried about the European economy.      

david.thorpe@ft.com