Head of US equities Simon Laing said his US fund has also cut back on its stake in Microsoft for similar reasons. “We have had to shift some capital in recent weeks to reflect diminishing returns in some areas and growing potential returns in others,” Laing said.
He explained that while there is still a ‘favourable backdrop for high quality banks’ due to economic growth helping loans numbers, after strong stock price performance this year there is 'not enough upside left to justify large positions'. It has retained small stakes in the three companies however.
In contrast, Laing is bullish on the prospects of Mastercard, which his fund has just bought in to. He said the stock had been on its watchlist for some time while it waited for the right entry point.
“MasterCard is a pure-play on the secular growth in the transition away from cash towards card and digital transactions,” he said. “Surprisingly these represent only 15% of global transaction volumes, even more surprising is that in the US, one of the most mature markets for debit and credit card penetration, cash transactions still represent around 40% of volumes," he added.
Laing said his US equities fund has also bought into biotech stock Gilead Sciences recently on expectations of upside related to a new drug being marketed by the company.
More generally Laing said Invesco is comfortable with the direction of the US economy in relation to its forecasts. “Corporate earnings growth for 2014 is expected to come in at 7%-8% and with a poor Q1 GDP figure because of the weather, this requires economic acceleration through the year, which we see as achievable,” he noted.
