This gap is a good indication that opportunities remain in the US market argues Daniel White, lead manager on the M&G North American Value Fund.
Speaking at the Portfolio Adviser Summer Congress 2015, White said while it is hard to argue that at an overall level, US markets are not displaying much value, if one drills down, there are definite pockets of opportunity.
“If you look at the parts of the market that have performed strongly, it has been companies that have quality, defensive or income paying characteristics. As part of the low interest rate environment, there has been a huge rush to safety and a huge hunt for yield, which has meant that some of the income stocks have been bid up to very high levels,” he says.
He adds: “Conversely stocks that are perceived as lower quality, that have a degree of uncertainty attached, have actually lagged from a share price and valuation point of view.”
