Three funds to weather a Clinton or Trump US election win
Miton US Opportunities fund
The fund aims to achieve long-term total returns by investing primarily in a portfolio of North American equities which the managers believe will give investors the greatest opportunity to benefit from the recovery in the US economy.
Nick Ford, one of the fund’s managers, said they had already invested in companies that they hoped would benefit from a strong economic environment and while there was significant focus on who would be the next president, they felt the bigger question to consider was ‘what would the Senate look like afterwards – will the republicans retain control of both houses?’
Taking a longer-term view, the managers principally use a bottom-up investment approach, identifying companies with a competitive advantage in products or services. Investors should appreciate their belief that companies with regular and growing cash flow are more likely to deliver attractive returns than immature businesses looking to develop new products or relying on one off events. This puts them in a safe position for the aftermath of the presidential vote.
AXA Framlington Health fund
The fund seeks to provide long-term capital growth by investing in listed healthcare companies of any size which can be based anywhere in the world, albeit there will be a natural weighting towards the US given the region’s prominence to these type of businesses. The topic of healthcare has been in the spotlight this presidential campaign, with Hillary Clinton not holding back on her views that drugs should be more affordable, while both candidates are supporting a funding increase for the National Institutes of Health and a reform of mental health programmes. The sector will therefore be in focus post result.
It is inevitable that the pharmaceutical and biotech sectors will remain under pressure post the vote which is important to note given that the sector is one of much interest to investors as it provides them with both growth and income opportunities. Nevertheless, this fund’s manager Dani Saurymper has said this week he remains confident on the outlook for the healthcare sector and despite the recent and potentially ongoing turmoil, he believes the ‘long-term growth drivers of the sector remain intact’. Subsequently, we believe this fund is a sensible long-term investment opportunity.
First State Global Listed Infrastructure fund
Infrastructure is perceived by many as being defensive, with mature businesses offering a steady and reliable level of income which can often have inflationary pricing linked in. This fund seeks investment opportunities from around the world, but importantly to note is that half of its portfolio is geared towards the US. Our view is that most developed economies have significantly under invested in their infrastructure. To remain competitive, economies such as the US have to invest to update their infrastructure to enable more reliable, efficient strategic assets like road, rail, sea ports, gas, electric and water utilities.
Due to such underinvestment in infrastructure, the fund’s manager, Peter Meany, believes the investment story in the sector still has about 15 to 20 years to run. He believes the global listed infrastructure market stands at around $2trn in size and is likely to grow over time, as governments float more assets onto the market. As a result, we would suggest that a fund such as this wouldn’t be a bad option post US election.
Andy Parsons is head of investment research at The Share Centre