THE AMERICAN BULL RUN
THE US stock market may have finished 2014 at a near all-time high, but investment experts believe that the bull run is far from over. A strong domestic economy and a favourable corporate backdrop mean US equities will remain one of the most attractive asset classes for investors this year.
Felix Wintle, head of US equities at investment house Neptune and manager of its US Opportunities fund, is among those who, in his own words, is ‘bullish of the US and the US stock market’.
His view is that a vibrant economy, supported by a buoyant jobs market, low inflation and a strong dollar, will feed through to the bottom lines of some of America’s biggest companies.
Improved profits, he says, will lead to higher share prices and dividends, continuing the S&P 500 Index’s meteoric rise. This tracks the performance of America’s 500 largest listed firms and includes many iconic global brands. Last week, it finished the year at 2,058.90, a near record high.
Given Wintle’s liking for large-cap stocks, Neptune US Opportunities is littered with big brands such as Apple and MasterCard.
Some might argue that Wintle is talking up his own book, but his is not a lone voice. Andrew Milligan, head of global strategy at investment house Standard Life Investments, is also a US bull.
Though he says the market looks relatively expensive, he believes that ‘the favourable economic fundamentals continue to support a steady uptrend in corporate earnings’. He is also enthusiastic about Japanese and UK equities.
Private wealth manager Brewin Dolphin has long been a bull of US equities. It sees no reason to change its view. Ben Gutteridge, head of fund research, says talk of company valuation excess is ‘overdone’. He adds: ‘US equities are fairly priced and the attractions relative to other asset classes remain highly compelling.’ As a result, he forecasts that US equities are set for ‘a sustained period’ of growth.
Fund scrutineer Morningstar believes Neptune US Opportunities offers an ‘attractive way’ for investors to gain US equity exposure. But it warns that its concentrated portfolio of no more than 60 stocks at any time means investors rely heavily on Wintle’s stock picking skills.
Most US fund managers have trumped Wintle over five years, but his three-year record is better.