With interest rates at record lows for the past six years, some investors may have become settled in this ‘abnormal’ environment, and the impending Federal Reserve hike could spring a surprise.
This, says Wintle, manager of the Neptune US Opportunities Fund, is why stockpicking will be key to generating performance as the investment cycle enters a new phase.
“All boats have been lifted by supportive central bank policy, but finding quality companies trading at attractive valuations, in my opinion, will be the key to success over the next phase of the cycle,” he said.
“The market as a whole continues to look strong to us. While some are concerned by the strength of the dollar, we are not. Many companies are suffering currency headwinds, but if the underlying trends are strong, we expect the market will look through this issue. We believe the US market is still good value and we have no shortage of ideas to invest in.”
Wintle believes that the rising rate environment could last up to 10 years, and accordingly holds an active share of 88.9%.
One area in which he is seeing opportunities is healthcare, which represents the largest sector weighting in his portfolio at 31.5%, with Cigna, Acadia Healthcare, Incyte and Allergan all in his top 10 holdings.
Having flat-lined in Q2, US consumer spending is now rising again, and Wintle is also bullish on consumer-related stocks, which he says are enjoying ongoing benefits from low commodity and oil prices.
“We like exposure to those areas that benefit from the weak oil price, in particular the consumer sectors, where we have almost a quarter of the fund invested,” he expanded.
“We believe the collapse in the oil price is unambiguously positive for the US consumer and see stocks in the restaurant and retail spaces as especially well-positioned at the moment.”
